Brexit is driving the housing market to a record low

The housing market is set to see its worst three-month period in two decades as forecasts suggest it will be driven down by Brexit uncertainty.

This follows calls from homelessness charity Shelter for the government to create 3.1 million new homes for social housing.

Sales expectations across the UK are either flat or negative, the poorest reading since the record began in 1999, and cites affordability issues as part of the problem. The 12-month outlook is slightly more positive, suggesting that the lack of clarity surrounding the UK’s departure from the EU is significantly impacting the property market.

The prediction by Royal Institution of Chartered Surveyors (RICS) members is based on a downward trend at the end of last year, as property prices fell for the fourth month in a row and the number of new homes on the market continued to decline.

Simon Rubinsohn, RICS chief economist, said: “It is hardly a surprise, with ongoing uncertainty about the path to Brexit dominating the news, that buyer interest in purchasing property in December was subdued.

“There is some comfort provided by the suggestion that transactions nationally should stabilise as some of the fog lifts, but that moment feels a way off.

“It is hard to see developers stepping up the supply pipeline in this environment. Getting to the government’s 300,000 building target [as pledged in last year’s social housing Green Paper] was never going to be easy but pushing up to anywhere near this figure will require significantly greater input from other delivery channels including local authorities taking advantage of their new-found freedom.”

Meanwhile a body of 16 commissioners – including Ed Miliband MP and Big Issue Changemaker David Tovey – brought together by Shelter launched their special report last week.

The commissioners argued that politicians “cannot remain idle at a time when half of young people have no chance of ever buying a home, private renters on lower incomes spend an average of 67 per cent of their earnings on rent, and almost 280,000 people in England are homeless”. Their findings were presented to Theresa May and Jeremy Corbyn at Westminster.

They proposed 1.27 million homes for those who are homeless or have a disability or long-term illness, 1.17 million homes for younger families who can’t afford to buy and are trapped in expensive private renting and 690,000 homes for older private renters who struggle with high housing costs and insecurity after retirement.

However the significant downturn in the property market could spell bad news for social housing.

In November, housing consultancy Savills warned that a drop in the market would affect housing associations who benefit from Section 106 – a clause in planning legislation that means developers must create some affordable housing within developments.

National Housing Federation figures show that 45 per cent of housing association homes created in 2016-17 were linked to Section 106.