UK house prices fell to their lowest level in six years in October, according to a survey released on Thursday.
The Royal Institution of Chartered Surveyors' house price balance dropped to -10 last month from -2 in September, marking its lowest level since September 2012 and missing expectations for an unchanged reading.
The declined was attributed mostly to London and the South East, as prices continued to rise in other parts of the UK, with the strongest growth in Northern Ireland and Scotland.
RICS said the weaker trend in prices is being driven by the lack of demand from new buyers, which is in part a result of heightened political uncertainty, ongoing affordability pressures, a modest upward move in interest rates and a lack of fresh stock coming onto the market
RICS chief economist Simon Rubinsohn said: “Although the tone of much of the newsflow surrounding the housing market remains downbeat, this continues to disproportionately reflect developments in the south and east of England with the picture remaining rather more resilient in many other parts of the country. Uncertainty about the economic outlook on the back of the never-ending Brexit negotiations appears a key drag on sentiment according to respondents to the survey.
“Meanwhile, the announcement of the extension of Help to Buy, albeit in a narrower format, should continue to underpin the new build market in the near term. Whether it, alongside other measures recently announced including the lifting of the HRA cap, is sufficient to drive housing starts up to the government's 300,000 target over the coming years remains to be seen.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, the near-10% decline in mortgage approvals in the run-up to the June 2016 Brexit referendum suggests that households will increasingly respond to no-deal Brexit risk by delaying housing purchases. But even if a transition period is secured, the housing market will remain sluggish, as the MPC likely will begin a faster tightening cycle.
“With loan-to-income ratios at unprecedented levels, even modest increases in mortgage rates will have a big impact on affordability and future house price growth. We expect house prices to rise by only 2.0% over the course of 2019, similar to this year's likely increase.”