Brexit adds to housing market uncertainty

The Brexit referendum is adding to housing market uncertainty which has seen a 2% drop in sales in major UK cities, new research shows.

April’s stamp duty reforms affecting buy-to-let landlords and second homeowners have also contributed to buyer nervousness.

City level house prices still rose 10.2% over the year, up from 8.6% a year ago largely due to constricted supply.

The average UK city house price currently stands at £231,700 with prices ranging from £109,000 in Glasgow to £455,000 across London.

But transactions in former hotspots fell sharply, with a drop of 7% in London and 20% in Cambridge.

Hometrack’s UK Cities House Price Index, published today, suggests that Brexit is likely to impact future volumes.

The referendum comes at a time when the stamp duty surcharge is expected to hit investors, who accounted for one in five sales in 2015.

The report questioned the sustainability of house price growth as volumes slow.

It said the annual rate of growth in cities across southern England is starting to plateau as sales slow and affordability pressures on would-be buyers increase.

Richard Donnell, insight director at Hometrack, said: "Slower growth in sales volumes has been a trend seen over the last three years across high-value, high-growth cities such as Cambridge, Oxford, Aberdeen and London, where house prices have been rising for six consecutive years.

“High housing and moving costs are limiting access to the market for a growing number of households which, in our view, will result in lower turnover and slower house price growth."

Donnell said the EU referendum adds further complexity to an already complex outlook.

“A vote to remain in the EU should see a return to business as usual whereas a vote to leave will create additional uncertainty," he said.