Brexit latest: Number of house buyers looking for new homes falls to lowest level in 3 years

The data suggests eight out of ten properties sold in July closed for less than their original market price

Zlata Rodionova

Friday 19 August 2016 14:53 BST

The number of house hunters registered per member branch dropped to an average of 298 (Getty)

The number of house buyers looking for a new home fell to its lowest level since November 2013, suggesting UK’s vote to leave the EU has led to a slowdown in the property market, according to the latest data from estate agents.

In July, the number of house hunters registered per member branch dropped to an average of 298, down from 330 in June, the National Association of Estate Agents (NAEA) found.

The figures are more than a third lower than in July last year, when 462 prospective buyers were registered per branch.

The poll, conducted using data from nearly 700 estate agents across the UK, suggests eight out of ten properties sold last month closed for less than their original market price.

Market Hayward, managing director at the NAEA, said estate agents expected to see the market cooling this summer and hoped activity would pick up again in September.

“We expected to see uncertainty in the immediate period following Brexit, and during the summer months the market always quietens down, so we are optimistic that the housing market will spring back in the coming months," Hayward said.

The recent drop in sales contrasts with increased activity in the first half of the year related to a stamp duty hike in April, which saw landlords rush to complete deals to avoid a higher levy on purchases of investment properties.

But several surveys suggested the amount of new buyers' inquiries and the number of agreed sales dropped further in July as the Brexit vote undermined UK consumers’ confidence and increased uncertainty about their finances and property values.

The Royal Institution of Chartered Surveyors has recorded the fastest decline in property sales for July since the financial crisis in 2008.

While Rightmove, a property listings website, said London properties were taking longer to sell, despite a summer price cut.

“The housing market is currently balancing a raft of somewhat mixed economic news alongside the latest policy measures announced by the Bank of England, which have already begun to lower cost of mortgage finance,” Simon Rubinsohn, Rics' chief economist, said.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

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6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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The speed and strength of the market recovery will depend on the traditional autumn market rebound, according to Rightmove.

“Having waited for the referendum result, it now seems that some [buyers] are also waiting until the summer holidays are over before reviewing their course of action,” Mile Shipside, Rightmove director and housing market analyst, said.

“By autumn we should get a clearer view of the strength of any post-referendum hangover, though that also depends on buyers’ confidence to turn this interest into action,” he added.

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