What does this show?

The chart, from the Royal Institution of Chartered Surveyors, shows the sustained drop in the number of new properties for sale reported by estate agents, which has continued to fall steeply following the UK’s referendum to leave the EU.

Despite a recovery in the early months of this year, Rics says the flow of new sales listings coming to market has contracted at the fastest monthly pace on record over the past three months, with supply at record lows in most parts of the UK. This “acute” shortage of housing supply is likely to be shoring up house prices, says Rics, which notes that across the UK levels of stock are at, or close to, record lows and the number of successful transactions is falling.

So what will happen to house prices?

That will largely depend on levels of demand. Although supply is dropping, numbers of people looking to buy also dropped significantly after the Brexit vote as people waited to see what effect this would have on the housing market.

The Rics survey, which compiles data from estate agents and surveyors across the UK, also recorded a slight uptick in buyer interest in the past month. The net balance of respondents who had seen a rise in buyer inquiries improved from minus 36 per cent in June to minus 27 per cent in July. However, new buyer inquiries dropped at a headline level, the fourth consecutive month of falling demand with sale volumes also declining sharply.

Andrew McPhillips, chief economist at Yorkshire Building Society, said if the slump in demand continued, a short-term drop in house prices should be expected. However, he added that any drop in prices might be shortlived if buyers then flooded in to snap up bargains. “The market may remain volatile in the coming months,” he said.

Chart: Housing stock

What do estate agents think will happen next?

They are a little more optimistic about prices this month compared with last — around a fifth of those surveyed by Rics now expect prices to increase over the next 12 months. This shows more confidence than last month, when nobody thought house prices would rise in the next year, but is worse than six months ago, when two-thirds expected a rise.

Simon Rubinsohn, Rics chief economist, said confidence in house price growth seemed to be “more resilient than might have been anticipated”. Estate agent David McKillop, who responded to the survey, took a sanguine view and acknowledged that while house prices have “come down a bit”, there was certainly “no sign of panic”.

Chart: Buyer enquiries

Capital Economics, the independent consultancy, warned that despite the initial shock of the referendum easing slightly, a slowdown in house price growth and a fall in transactions was still to be expected. It has estimated that house price growth will slow to about 2 per cent by the end of 2016.

So has this all been triggered by Brexit?

No — although it didn’t help. House price data from LSL/Acadata suggest price inflation was already slowing before the Brexit vote, with the annual rate of growth falling in May for the fifth consecutive month.

In central London, prices have also been weighed down by the impact of tax rises which have deterred overseas buyers. London estate agent Foxtons recently reported a 42 per cent year-on-year slump in first-half profits, as uncertainty over the referendum hit an already faltering property market in the capital.

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