The prospects for the UK housing market over the coming months look very uncertain after the country voted to leave the European Union.
Property market analyst Hometrack said that the immediate impact of the referendum result is likely to be ?a fall in housing turnover and a rapid deceleration in house price growth as buyers adopt a wait and see approach to assess the short-term impact on financial markets and the economy at large.?
The greatest impact is likely to be on market activity rather than house prices, the firm added.
London-based estate agency Foxtons issued a profit warning on Monday, saying that it expects a significant decrease in revenues and adjusted EBITDA for the full year.
?The run up to the EU referendum led to significant uncertainty across London residential markets and the decision to leave Europe is expected to prolong that uncertainty,? Foxtons said. ?Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise.?
Another estate agency, Savills, also warned that uncertainty in the market is likely to pull back price growth and transactions in the short term.
?The prospect of an increase in mortgage interest rates and a reduction in wage growth is expected to create greater affordability pressures over the medium term, particularly in London where borrowers have stretched themselves further,? explained Lucian Cook, Savills UK head of residential research.
Jeremy Leaf, former chairman of the Royal Institution of Chartered Surveyors (RICS), quoted by City A.M., said that house price growth will depend on decisions made by the Bank of England.
?If inflation goes up, the Bank of England may be obliged to raise interest rates which will have an impact on the property market. If interest rates don?t go up, that will help reduce volatility in the market as a rate rise affects confidence,? Leaf said.
In a statement released after the referendum, RICS stressed the need to minimise uncertainty over the UK?s future relationship with the EU.
?While Whitehall focuses energies into the exit negotiation, Britain must meet the housing supply and infrastructure challenges it continues to face. Projects or property transactions which were delayed, shelved or postponed due to the uncertainty surrounding the referendum must be given the confidence and security to begin to move again,? the organisation concluded.