(Bloomberg) -- A gauge of U.K. house prices dipped to its lowest in more than five years last month, according to the Royal Institution of Chartered Surveyors, with the slowdown most acute in London and the southeast.
RICS’s gauge of prices dropped to minus 8, the lowest since November 2012, the organization said in a report Thursday. The descent into negative territory follows months of stagnating prices, and surveyors don’t expect any pick-up in the near term.
“The market is not really functional at present,” said Donald Leslie, from chartered surveyor Donald Lesie & Co. in Amersham, a town around 30 miles (48 kilometers) northwest of London. “Low stock, low demand, stamp duty, lack of affordability, massive uncertainty” are contributing factors, he said.
The report is the latest to show strain in the U.K. property market, with a survey from mortgage lender Halifax this week suggesting prices plunged the most in almost eight years in April. The figures, coupled with recent data showing consumers remain under pressure and growth is slowing, provide an uncertain backdrop for Bank of England officials as they prepare to announce their latest policy decision on Thursday.
RICS’s survey showed that declines were most pronounced in the capital and the southeast, while prices picked up in Scotland and Northern Ireland.
In London, the property market has been roiled by tax changes and the U.K.’s decision to quit the European Union. Years of rampant price gains have also stretched affordability, putting off potential buyers. A net balance of 65 percent of London agents reported falling prices last month, the weakest reading since the depths of the financial crisis in early 2009.
At the national level, upper and middle-priced sections of the market are proving the most challenging, with almost 70 percent of respondents saying properties valued at over 1 million pounds ($1.4 million) are being sold for less than the asking price. New buyer inquiries were unchanged in April after four straight months of declines, the report said, and agreed sales stabilized.
“The housing market typically tends to see a pickup in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone,” said Simon Rubinsohn, RICS Chief Economist. “However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat.”
There was some silver lining for the property market in the capital -- a balance of 10 percent of survey respondents in London reported an increase in agreed sales, RICS said, the first positive reading in over a year. Looking ahead, some gains in transactions at the national level are also expected in the next twelve months.
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