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Batten-down! Market is beginning to soften says latest RICS report

Recent instructions and sales surge is showing signs of weakening as third Covid lockdown and Stamp Duty cliff-face impact confidence.

Nigel Lewis

rics report

The number of estate agents reporting lower buyer enquiries and listings jumped significantly during January after several months of eye-popping sales market surges, RICS reports.

Its monthly survey of member agents across the UK revealed that a net balance of -28% of agents reported a decline in new buyer enquiries last month, along with a -38% net balance of new properties coming on the market and a -26% net balance of appraisals.

RICS ‘net balance’ is worked out by subtracting the percentage of agents reporting good news from those reporting bad.

Covid restrictions

These negative figures from RICS, it says, suggest that the property market is beginning to suffer as Covid restrictions and the looming end to the Stamp Duty holiday eat into consumer confidence.

Agents also reported selling fewer properties, although the softening market hasn’t impacted house prices with a positive net balance of agents reporting rising prices as demand continues to outstrip supply.

An increased number of agents also said they expected a rough ride over the next few months as the furlough scheme and Stamp Duty holiday end.

More member agents also reported softening enquiries from tenants and landlords instructions.

Simon Rubinsohn - RICS - image“The latest RICS survey suggests that despite attempts to keep the housing market open through the latest lockdown, there has been perhaps an inevitable impact on the level of activity in the sector with both enquiries from potential buyers and new instructions slipping back,” says its chief economist Simon Rubinsohn (pictured).

“That said, actual transaction numbers will remain firm over the next couple of months reflecting the completion of deals that in many cases were agreed through the back end of last year.”

Tom Bill, Head of UK Residential Research at Knight Frank

tom bill knight frank

“The initial wave of activity since the market re-opened last May is working its way through the system but a third national lockdown and the closing window of the stamp duty holiday is magnifying that effect.

“Home-schooling means selling a property has taken a back-seat for many people and the ticking clock of a stamp duty holiday will have deterred others in the belief they won’t make the deadline. For those that don’t make the stamp duty deadline, a renegotiated sale is a more likely outcome than a collapsed sale because the emotional aspect of moving house has become so much more profound during the pandemic.

“We expect prices to be flat over the course of this year as demand becomes steadier and more seasonal in the second half of the year.”

Anthony Codling from Twindig

Link to Anthony Codling

“It seems that Stamp Duty Holiday history is repeating itself, with the RICS lead indicators implying that following a storm of activity leading up to the Stamp Duty Holiday deadline, there will be a lull in transactions and a relative period of calm whilst backlogs are worked through and the market finds its way back to equilibrium.”

February 11, 2021

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