House prices and sales expected to fall sharply because of Brexit, surveyors say

New buyer enquiries fell by more than a third in June, RICS said

House prices were already falling before Brexit happened (Getty)

House sales will fall sharply following the UK's shock decision to leave the EU, according to the Royal Institution of Chartered Surveyors.

A downward trend in house sales is expected to continue through the summer as buyers put off their plans amid uncertainty.

Surveyors said house sales were down in June and are expected to drop another 26 per cent over the next three months in the most negative reading since 1998.

The number of new buyers making enquiries also fell by 36 per cent in June to the lowest reading since June 2008, surveyors said. This was the third consecutive month that inquiries had declined.

Nearly half of London surveyors said that prices had fallen in June, especially in central London.

"Big events such as elections typically do unsettle markets so it is no surprise that the EU referendum has been associated with a downturn in activity.

"However, even without the build up to the vote and subsequent decision in favour of Brexit, it is likely that the housing numbers would have slowed during the second quarter of the year, following the rush in many parts of the country from buy to let investors to secure purchases ahead of the tax changes," Simon Rubinson, chief economst at RICS, said.

House prices were already falling before Brexit happened. In May, the average discount on the original asking price of a UK property was over £25,000 — up nearly £4,000 compared with January.

Rent in London has fallen after Brexit, according to some estate agents. More retail properties are joining the market as potential sellers decide to rent out their homes and wait out the Brexit uncertainty instead.

When rent falls, housebuilders hang on to land. The first sign of this came when Barrett Developments said that it might rethink its housebuilding and land-buying plans because of Brexit uncertainty.

“We had contingency plans in place and we have taken appropriate measures to reduce our risk, such as reassessing land approvals, as we continue to monitor the market," David Thomas, Barrett chief executive, said.