UK HOUSE price inflation is set for a slowdown over the coming months as the impact of new stamp duty changes and the EU referendum combine to create a climate of uncertainty in the country’s housing market, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.

These factors have been most strongly felt in central London where 38 per cent more respondents expected to see house prices fall than rise over the next three months.

Across the UK, sentiment around house price inflation has also dampened with 17 per cent of respondents (net balance) expecting to see prices rise over the next three months.

However, respondents across the South West remain confident that prices will continue to rise in the near term with 37 per cent more contributors expecting an increase in prices rather than a fall.

Furthermore, the longer term outlook is firmly positive with prices in the South West projected to rise by more than four per cent each year for the next five years.

Sales expectations in the South West remain upbeat with 18 per cent more surveyors expecting sales to rise rather than fall – little change from last month.

However, across the UK after expectations around the number of new house sales peaked following the Chancellor’s Autumn Statement, this trend has reversed with two per cent more respondents expecting to see the number of sales fall rather than rise over the coming months.

That said, the South West has seen a significant slowdown in the growth of sales in March following the previous month’s record rise.

Just six per cent said that sales had increased rather than decreased.

RICS Chief Economist, Simon Rubinsohn, said, “As expected the buy-to-let rush has now run its course and as a natural result the market is starting to slow.

“But there are other significant factors that are currently weakening short term confidence in the UK property market.

“The EU referendum is likely to be an influencer in terms of the damper outlook for London in particular.

“However, all indications suggest that whatever the outcome of the forthcoming referendum, in the long-term the imbalance between demand and supply will still exert a strong influence on the market with house prices expected to rise by close to 25 per cent over the next five years.”

Despite the increased rates of stamp duty tax now expected to be paid by prospective landlords, rent inflation – while expected to increase – is not predicted to rise any faster than it has in previous months.

Although over the next five years respondents continue to anticipate rents will increase by an average of more than six per cent per annum, there is no indication yet that tax increases are being passed on to the tenant.

In the South West 69 per cent of surveyors expected rents to increase rather than decrease over the next three months – the highest percentage expecting increases in the UK.