Housing market to slow after mini-boom - RICS
By Sean Farrell
Date: Thursday 12 Nov 2020
(Sharecast News) - The housing market is expected to stay busy for the rest of 2020 before slowing down as the stamp duty holiday draws to a close and the economy remains in trouble, a survey published on Thursday showed.
Demand for new properties and the flow of homes listed for sale remained strong in October, RICS - the Royal Institution of Chartered Surveyors - said.
The number of people looking to buy a property rose for the fifth month in a row with a net balance of +46% of estate agents reporting a net increase in buyer enquiries. A score of zero marks the difference between a rise and fall.
The number of properties on estate agents' books stayed low but agreed sales increased. The survey found +41% of respondents had a rise in transactions - up from an average of 9% over the past year.
Over the next three months estate agents expect the market to stay busy with +17% of respondents expecting sales to rise. But beyond that point the market is expected to slow down with -27% of agents predicting weaker sales over the next year.
The property market is in a mini-boom driven by Chancellor Rishi Sunak's waiver of stamp duty on the first £500,000 of a purchase until 31 March. Buyers rushing to save money, pent-up demand after the first coronavirus lockdown and people looking for more space have sent the market into a frenzy.
But a further lockdown in England and rising joblessness threaten to increase and prolong economic uncertainty with an impact on property demand and prices.
Simon Rubinsohn, RICS' chief economist, said: "The housing market remains very busy and despite the second national lockdown, the sense is that this will persist over the coming months and into the new year. However, there is understandably more caution about activity looking beyond the first quarter of 2021.
"Aside from the withdrawal of government incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come."
Prices have risen sharply but October's survey showed the reading for asking prices moderating to +13% from +22% in September. RICS's findings echo the results of Halifax's survey which showed price rises slowing in October with a downturn lying ahead.
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