But transaction levels and house prices are expected to pick up over the next 12 months.
House prices look set to fall in the months ahead as Brexit uncertainty continues to weigh on the property market.
Buyer demand fell in all areas of the UK in March. And in further gloomy signs, the decline in the number of properties put on the market accelerated and the level of agreed sales continued to fall, according to the Royal Institution of Chartered Surveyors (RICS).
Simon Rubinsohn, RICS Chief Economist, said: “Against this backdrop, there is little possibility of delivering the uplift in supply necessary to address the ongoing housing crisis.”
RICS said its survey results pointed to a modest fall in house prices across the UK as a whole over the coming few months, with transaction volumes also expected to soften.
Why is this happening?
The group blamed the stagnant housing market on the ongoing uncertainty caused by Brexit, which has caused many potential buyers to sit tight.
Rubinsohn said: “Brexit remains a major drag on activity in the market with anecdotal evidence pointing to potential buyers being reluctant to commit in the face of the heightened sense of uncertainty.”
He added that some survey respondents expected a Brexit deal to shift the mood of the market, but this remained to be seen.
Who does it affect?
Renters are also faring badly, with the number of tenants increasing for the third consecutive month, while instructions from landlords fell further.
As a result, letting agents are predicting average rents will increase by 2% during the coming year.
What’s the background?
Going forward, estate agents are more optimistic about the market’s prospects over the coming 12 months, expecting transaction levels to pick up and property values to be higher.
Despite the current market stagnation caused by Brexit, the UK still faces a significant property shortage.
It is estimated that between 240,000 and 340,000 new homes need to be built each year just to keep pace with demand, but government figures show that just 165,090 new homes were built in 2018.
Until the mismatch between supply and demand is addressed, prices are likely to continue increasing over the longer term.
Top 3 takeaways
- House prices look set to fall in the immediate future
- Demand from buyers fell in all areas of the UK in March
- Developers are also adopting a more cautious approach
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