Property prices still rising

The Royal Institution of Chartered Surveyors (RCIS) has released its latest Residential Market Survey. It shows that whilst property sales in August softened for the second month in a row, they are likely to stabilise in the coming months.

Responses

This month’s survey included 288 responses, covering 512 conveyancing branches across the UK.

The highlight from this month’s report is that house price growth is starting to slow, but as there is a lack of new property listings joining the market, it is predicted that prices will continue to rise, just at a slower pace.

New listings of properties were down 37%, continuing the trend seen for the last 8 months.

This means that stock levels on agent’s books are getting close to record lows, at an average of 38.

This demand vs supply issue saw responders reporting strong property price inflation, with over 73% saying they’d seen prices increase since the previous survey.

New buyer enquiries also fell, with 14% of responses saying they had seen fewer house hunters, a drop from 9% in July.

Looking to the remainder of the year, responders were still optimistic about market prospects.

Tarrant Parsons, an RICS economist, commented:

“The latest survey evidence inevitably points to market activity taking a breather following the flurry of sales seen ahead of the tapered stamp duty holiday withdrawal. That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.

“Nevertheless, given the real shortfall in new listings becoming available of late, there remains strong competition amongst buyers and this is maintaining a significant degree of upward pressure on house prices. What’s more, prices are expected to continue to climb higher over the year to come, albeit the pace of increase is likely to subside somewhat in the months ahead.”

Conveyancing and landlords

Tenant demand for homes to rent accelerated in August. 66% of responses reported a pick-up in enquiries, from the 58% in July.

However, a further decline in landlord instructions has fuelled expectations among respondents (64%) that rents will go up over the next three months.

This could be good news for landlords, as a more competitive market could help some recover losses incurred by the pandemic.

On the other hand, further property price gain provides landlords with little room to manoeuvre in terms of gaining new properties into their portfolios.

This could be a short term issue, however, as stamp duty is planned to return to pre-pandemic levels at the end of the month, indicating that the property markets may start to return to normal.

Stamp Duty Land Tax

One clear response can be seen in the RICS’s calls for an overhaul of the SDLT, given the success of the holiday scheme that is coming to an end at the end of September.

Bradley Tully, senior public affairs officer at RICS, commented:

“RICS was supportive of the stamp duty holiday as a response to unique market circumstances last year during the height of the pandemic, though the scope of the holiday was arguably broader than we had anticipated and it should have been allowed to expire as originally intended.

“Over the long-term, RICS believes that an overhaul of stamp duty land tax should ultimately be delivered. Indeed, earlier this year the House of Commons Treasury Select Committee recommended that reforming stamp duty should be a priority for the government in their report, ‘Tax After Coronavirus’.

“We would urge the government to undertake a full-scale review of the current stamp duty land tax system to assess future ideal outcomes in terms of factors such as revenue generation and housing market fluidity. Housing affordability for first-time buyers and key workers should remain a crucial factor when considering access to the market too."