LONDON: A measure of London house prices fell to its lowest level since the height of the financial crisis as Brexit sent shock waves across the UK.
The index dropped to minus 46 in June from minus 35 the previous month, the Royal Institution of Chartered Surveyors said, citing a survey of real-estate agents. That’s the weakest reading since early 2009. All responses were received after the European Union (EU) referendum on June 23.
A separate report from Acadata Ltd and LSL Property Services Plc showed home values in the capital were already being hurt ahead of the vote, with prices decreasing 1.4% in May, the biggest monthly fall since June 2011.
RICS’s survey provides the first insight into the impact the decision to leave the EU is having on the housing market. It shows nationwide demand falling to its lowest level since the middle of 2008, while the number of properties put up for sale plunged to a record low.
A gauge of sales expectations for the next three months was at its weakest in 28 years.
“It was always likely we were going to see a bit of a fallout from the EU referendum,” Simon Rubinsohn, RICS’s chief economist, said in an interview on Bloomberg Television with Guy Johnson and Caroline Hyde. “It’s also part of a trend that emerged at the start of the second quarter, particularly the London data.”
The trade body said its national house-price measure declined to 16 in June from 19 in May. While that indicates overall prices were still increasing, it’s the lowest reading since January 2015.
RICS said a measure of near-term price expectations fell to minus 27, with all the 12 areas in England and Wales it tracks in negative territory. Its nationwide gauge of price expectations for the next year plunged to zero in June from 54. The survey was conducted between June 24 and last week.
In their report, Acadata and LSL said values in England and Wales rose 0.6% in June from May to an average £293,444 (US$387,000), the first gain in four months. On an annual basis, value inflation slowed to 6% from 6.1%. – Bloomberg