UK housing market strengthens in September as Brexit hit fades

[LONDON] The UK housing market strengthened in September after the shock inflicted by the Brexit vote faded and a shortage of properties for sale persisted.

The Royal Institution of Chartered Surveyors said its house-price gauge rose to 17 from 13 in August as an increasing number of real-estate agents reported appreciating prices. Values continued to decline in central London, home to the priciest real-estate in the country.

The housing market endured a rocky first half as a tax surcharge on investment properties and the decision to leave the European Union kept buyers at bay.

Since the Brexit referendum, however, the economy has proved more resilient than many forecast, while mortgage rates have fallen to record lows following the Bank of England's interest-rate cut in August.

"The market does now appear to be settling down following the significant headwinds encountered through the spring and summer," Simon Rubinsohn, RICS chief economist, said in an e-mailed statement. "Buyers do appear to be returning, albeit relatively slowly, but the big issue that continues to be highlighted by respondents is the lack of fresh stock on the market."

New buyer enquiries increased for the first time since February, with the measure of demand showing "a significant turnaround relative to June", RICS said. Price expectations climbed as new instructions fell for a seventh month, leaving the stock of properties for sale "exceptionally low", the company said.

After years of outperforming the rest of the country, London bucked the national trend. About 60 per cent of those surveyed said values in London and the southeast of England were "above fair value".

Property prices in the capital were expected to be little changed in 12 months, the only region where an improvement is not predicted.

"Central London remains something of an outlier with contributors telling us this is the one part of the market where there may be further give on prices in the near term," Mr Rubinsohn said.

"Elsewhere, the price trend still seems on the up."

BLOOMBERG