Sales and price slowdown hit housing market at end of 2016

Rics survey shows rent and price pressures spreading from expensive parts of the housing market.

The housing market saw activity drop in December 2016, said RicsJustin Tallis/AFP

Activity in the housing market "faltered" during December, said the Royal Institution of Chartered Surveyors (Rics). A survey by Rics of its members found that 1% more chartered surveyors saw a fall than a rise in sales during the month.

Moreover, there was no increase in new instructions to sell, the tenth consecutive month without improvement in the number of listings, reflecting an ongoing supply problem in the housing market which is underpinning house prices.

A balance of 24% more surveyors reported higher prices than lower in December, down from 29% in the previous month. The lettings market saw a slight increase in demand from tenants against flat supply from landlords, pushing rents a little higher.

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At a regional level, the slowdown in London as affordability issues and tax hikes for investors bite on demand is distorting the headline national picture. London's decline is beginning to reverse the historic trend of the city outperforming the rest of the country, as house price and rent growth now accelerates in cheaper areas elsewhere.

Simon Rubinsohn, Rics chief economist, said the latest monthly survey "provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill."

Land Registry's house price index for November 2016 said London's average price rose by 8.1% over the year to £481,648. That compares with 7.2% growth for England as a whole, which has an average house price of £234,278.

The estate agent Savills predicts zero growth in UK house prices in 2017 as affordability pressures, stamp duty and other tax increases, and Brexit uncertainty weigh on the market.

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