House Prices in London, Southeast U.K. Forecast to Keep Falling

(Bloomberg) -- The Brexit gloom hanging over the U.K. property market showed no signs of letting up in March, with real-estate agents expecting house prices in London and southeast England to continue falling for another year.

Britain’s tortured departure from the European Union was widely cited in the latest survey from the Royal Institution of Chartered Surveyors, which painted a picture of anxious buyers, reluctant sellers and agents struggling to negotiate agreements.

Demand and supply declined, the report published Thursday found, and an index of prices remained deep in negative territory -- pointing to “modest” losses over the next two quarters. A subsequent recovery is expected to elude London and the southeast, where the market is in its worst slump since the financial crisis.

“Brexit remains a major drag on activity in the market, with anecdotal evidence pointing to potential buyers being reluctant to commit in the face of the heightened sense of uncertainty,” said Simon Rubinsohn, chief economist at RICS. “Whether any deal provides the shift in mood music envisaged by many respondents to the survey remains to be seen, but as things stand there is little encouragement to be drawn from key RICS lead indicators.”

With Prime Minister Theresa May unable to win a parliamentary majority for her Brexit deal, the EU has offered Britain a delay to its departure from the bloc until the end of October. The new deadline risks months more of uncertainty for businesses and consumers.

Here’s a roundup of comments made by agents in the RICS survey:

John Haigh -- Lister Haigh in northern England:

“Brexit again, again, again, again. Uncertainty Rules.”

Stephen Smith -- Fraser Wood in central England:

“The normal spring market has not materialized. There just seems to be a general lack of confidence in the market with viewers indicating that Brexit is a concern and sellers not wishing to commit at this moment.”

David H Knights -- David Brown & Co. in eastern England:

“Sales of good quality houses in the right areas at the right price do generate
interest but new instructions and buyer enquiries remain weak.”

James Farrance -- Braxton in southeast England:

“Still some trepidation from buyers due to the ongoing Brexit shambles created by Westminster. However, some buyers are seeing now as a good time to buy.”

David McKillop -- McKillop and Gregory in southwest England:

“A good start to the month, but then it slowed down. Have lost one buyer due to Brexit uncertainty. Very difficult market.”

Christopher Ames -- Ames, central London:

“Vendors have now joined purchasers in deferring transactions until Brexit outcome is known.”

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, David Goodman, Lucy Meakin

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