Hometrack is the latest property organisation to forecast that the referendum result will impact turnover far more than house prices in near term.
Richard Donnell, insight director of the property data consultancy, says in his latest city price index report that the impact of the Brexit decision on urban areas is hard to gauge but he expects London to be first hit – it’s in the capital where “affordability levels are stretched and the market was already facing headwinds” he says.
Despite the warning concentrating on reduced transaction volumes, Donnell also cautions that “we expect a rapid deceleration of house price growth across all cities in the second half of 2016.”
Meanwhile Hometrack’s latest index – which is for May, so not affected by the Brexit decision – shows an increase in prices of properties in most urban areas, fuelled by the surge in buy to let purchases in the earlier part of this year.
Year on year growth is running at 11.2 per cent for the 65 cities analysed by the consultancy, compared to 6.2 per cent 12 months ago.
The highest growth rates in the last quarter were from Liverpool (5.4 per cent), Bristol (4.2 per cent), Manchester (3.9 per cent) and Leeds (3.7 per cent).
“The immediate and short term impact of the EU referendum result will be widespread uncertainty amongst buyers and sellers across the housing market. This is against a backdrop of already subdued turnover – while sales volumes have recovered from their 2009 lows, sales as a percentage of stock remain low by historic standards at around five per cent, or a move every 20 years” explains Donnell.
“Aside from the 2008/9 downturn, when sales fell almost 50 per cent off a high base, the previous economically driven fall in sales was in 2005 when volumes contracted 15 per cent. There was also a small contraction in turnover in 2015 and further sizable decline in housing market turnover now seems inevitable over the second half of 2016 on widespread uncertainty.”