UK housing market shrugs off 'initial shock' of Brexit, says Rics

The housing market is "settling down" after the vote for Brexit as confidence returns, according to the Royal Institution of Chartered Surveyors (Rics). A monthly survey of Rics members for August 2016 said that 12% more property professionals reported an increase in house prices over the month, up from 5% in July.

Moreover, for the first time since April, prices expectations moved into positive territory with 10% more of those polled predicting prices would rise rather than fall over the coming three months.

And the measure for sales agreed — the difference between those reporting higher and lower sales — soared from a balance of -32% in July to zero in August. "There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum," said Simon Rubinsohn, Rics chief economist.

"It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence.

"The more assured mood is also reflected in some of the longer term Rics indicators although this in itself could serve to reignite ongoing concerns surrounding affordability with five-year projections for both prices and rents in the latest survey back to their highest level since May."

Economic uncertainty after the vote for Brexit in the 23 June referendum sparked the Bank of England to slash its base rate in half to 0.25% and inject an extra £170bn of stimulus.

There have been mixed reports from the economy since the vote, but a sharp improvement in the service sector – which accounts for around three quarters of GDP – is allaying some fears about the consequences of Brexit.

The formal process of leaving the EU does not start until the UK invokes Article 50 of the Lisbon Treaty, which Prime Minister Theresa May has suggested may take place in 2017. The terms of exit and a new relationship between the EU, single market and UK are yet to be agreed.

Halifax's house price index for August said the average dropped by 0.2% over the month to £213,930. Over the year, house prices were still rising, up 6.9% on August 2015. But this was a slowdown from July's annual rate of 8.4%.

"House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase," said Martin Ellis, housing economist at Halifax. "There are also signs of a softening in sales activity.

"The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth."