The U.K. housing market remained listless in July as Brexit uncertainty intensified and Britons braced for an interest-rate increase from the Bank of England, according to the Royal Institution of Chartered Surveyors.
Prices and sales stagnated and property values in London continued to fall, RICS said in a report published Thursday.
“The continued uncertainty of Brexit, combined with punishing transaction costs are deterring any movement in the sales market, unless it is essential,” said Tom Dogger, managing director of BN Investment Ltd. in London. “Sellers have to offer large discounts to attract any interest.”
The BOE raised interest rates to the highest level since 2009 last week and fears are mounting that Britain could crash out of European Union without a deal. The summer heatwave and vacations also made for a quiet month in the housing market, agents said.
The report highlighted the growing pressures in the rental sector as many landlords flee the market because of tax changes introduced over the past two years. RICS said fewer properties were made available to tenants last month and predicted the squeeze on supply could push up rents by 15 percent over the next five years.
Simon Rubinsohn, the chief economist of RICS, said that higher rents are inevitable unless the government increases support for private rental projects or social housing.
“At the present time, there is little evidence that either is likely to make up the shortfall,” he said. “This augers ill for those many households for whom owner occupation is either out of reach financially or just not a suitable tenure.”