UK property prices got a Brexit bounce — almost everywhere but London

San francisco housing crooked bent slant sliding

Confidence in the UK housing market is gradually returning after a Brexit shock, according to a survey by the Royal Institute of Chartered Surveyors.

The August RICS survey found that prices across the UK are expected to rise in the next three months, with housing market activity subdued but stable.

“During August, 12% more respondents nationally reported an increase in prices, up from +5% in July,” RICS said in its survey.

“Although this reverses a run of five consecutive surveys in which the net balance has decelerated, from a high of 50% in February, it is still the second weakest reading over the past eighteen months.”

The housing market in London, home to the UK’s financial and political centres, may be the hardest hit by the decision to leave the European Union. RICS noted that the 30% more respondents saw a fall in house prices than those that saw a rise, which is the sixth consecutive negative reading for the capital.

In contrast, respondents said they observed price increases in most other parts of the UK.

The report shows a return of confidence in the housing market, following a sharp dip in June — the month of the European referendum. RICS said new buyer enquiries “declined significantly” in June, with 36% more chartered surveyors reporting a fall in interest as part of the June housing survey, the lowest reading since 2008.

In that month, just over a quarter of surveyors said they expected a further drop in sales across the UK for the coming three months, which is the “most negative reading for near term expectations since 1998,” according to RICS.

The bounce is noticeable in the charts. Here is the chart of new sales, courtesy of RICS:


And here is the rebound in new buyer enquiries:


But prices in London are still looking shaky compared to the rest of the country:


The figures echo recent readings of economic activity, which were good enough to lead both Credit Suisse and Morgan Stanley to row back on their predictions of a so-called “Brecession.”

In the last week alone, IHS Markit’s PMI surveys for all three crucial sectors of the economy — services, manufacturing, and construction — have bounced back from disastrous figures in July.

But there is still debate over the economic consequences of Brexit. The UK is yet to start negotiating the terms of its exit with the EU, so it may take years before any real fallout is felt.

On Wednesday, the National Institute of Economic and Social Research said it estimated UK GDP grew by just 0.3% in the three months to August, down from 0.4% in July, suggesting that the UK economy is flatlining.

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