Homebuyers 'Wait And See' Amid EU Uncertainty

The housing market is facing a slowdown as uncertainty in the wake of the UK vote to leave the EU is "very likely" to see people delay buying a new home, according to experts.

Property prices are also set to take a dip while it has been suggested that mortgages could become more difficult to secure and less affordable if lenders move to impose tighter controls.

The London housing market is expected to be hit the hardest as buyers wait to see how the economy, jobs and mortgage rates will be affected.

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Concerns have also been raised that Brexit could lead to a shortage of skills in the construction industry.

The Government has been urged to ensure "the free-flowing tap of migrant workers from Europe is not turned off".

Commenting on the impact of Brexit on the property market, Jan Crosby, head of housing at KPMG UK, said: "As we enter a new phase of uncertainty following the UK’s vote to leave the EU, it is very likely people will put big decisions on hold, and one of the biggest decisions people ever make is a house purchase.

"This means we can expect short-term transaction volumes to decrease and to stay deflated for some time – perhaps until next spring."

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She (Munich: SOQ.MU - news) added: "It is likely there will be a price drop in the order of 5% in regional UK, possibly slightly more in London, but we are most likely to see a drop in the growth in asking prices rather than pricing, which will likely change less."

A report from property agent Knight Frank said that as well as buyers being affected, the uncertainty could also make sellers more reluctant to put their property on the market, "and this lack of supply will provide a floor under prices".

Knight Frank also said there was a chance mortgage rates could become "detached" from the Bank of England base rate, which is currently at 0.5%.

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Lenders have offered some of their cheapest ever mortgage deals in recent years against the background of low interest rates.

But Knight Frank suggested while the base rate could be cut further, lenders could start raising their mortgage rates as a technique to control their lending levels.

Mark Harris, chief executive of mortgage broker SPF Private Clients, described current mortgage availability as "good".

But he added: "When there is uncertainty it affects confidence and people are put off making decisions.

"Those who were thinking about buying property may now decide to leave that decision to, say, next year, in the hope that property prices will fall in the meantime."

Brian Berry, chief executive of the Federation of Master Builders (FMB) said: "The UK construction industry has been heavily reliant on migrant workers from Europe for decades now – at present, 12% of the British construction workers are of non-UK origin.

"It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off.

"If ministers want to meet their house building and infrastructure objectives, they have to ensure that the new system of immigration is responsive to the needs of industry."