More home sales were agreed in March, aided by the Chancellor’s decision to extend the stamp duty holiday, and prices also increased due to demand outpacing that of supply – this is the view according to a majority of chartered surveyors responding to the RICS Residential Market Survey, March 2021.
A net balance of +42% of respondents cited an increase in new buyer enquiries during March, up from the 0% reading from the previous month and the strongest return since September 2020. While the pace of the rise in new instructions didn’t match the rate of demand growth, leading to an increase in prices, a net balance of +29% of surveyors reported that appraisals were up on the same period last year, suggesting more new instructions should come onto the market in the coming months.
Agreed sales also rose sharply in March, with a net balance of +50% of contributors reporting an increase. This is the strongest reading since August last year. On the back of this pick-up, respondents are anticipating sales activity will continue to increase over the coming three months, with the most upbeat net balance since January 2020 (+35% in March).
With demand continuing to outstrip supply, it is unsurprising that prices have increased across the country with a net balance of +59% of respondents citing a rise since February’s survey was published. In terms of the regional breakdown, prices are reportedly on the up across all regions/countries of the UK, with the strongest momentum signalled by respondents in the North West, Yorkshire & the Humber, as well as Northern Ireland.
Respondents expect prices to continue to head upwards over the next three months, with a net balance of +42% anticipating an increase in the near term (up from +16% from the previous month). This rises to +60% when respondents were asked to consider the next year.
Looking at the rental market, tenant demand increased according to a net balance of +36% of contributors (from +26% in February). However, new instructions from landlords are falling (net balance of -25%), and respondents felt this would place greater upward pressure on rents with a net balance of +47% expecting an increase. The only part of the UK where rents are expected to remain the same or fall was in London, with projections sitting in flat to marginally negative territory across the capital.
Simon Rubinsohn, RICS chief economist, said: “The results from the latest RICS survey show that the decision of the Chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market with all the key activity indictors rebounding in March. However, the headline numbers as well as the anecdotal remarks from respondents clearly demonstrate that across much of the market, demand is outstripping supply and that as a result, prices continue to move upwards. More worryingly, this is also being reflected in the price expectations data both at the 12-month horizon and beyond.
“Meanwhile the lettings market is displaying a broadly similar characteristic in terms of the relationship between demand and supply according to the RICS data with the notable exception of the numbers for London. Significantly, despite rents moving higher, contributors continue to point to the less favourable environment for investors in the market as playing a key role in fuelling this imbalance.”
In the North West, Ainsley Ball at Chesters in Chorley, said: “The original covid-19 restrictions in the middle of 2020 created a backlog of prospective movers. Once the original restrictions were lifted and the governments stamp duty amendments were put in place, the market boomed. Sales are at the highest in five years and continue to be extremely positive.”
In Yorkshire & Humber, Alex Mcneil at Bramleys in Huddersfield, commented: “It’s 15 years since there was this level of interest in the housing market. There are increasing values and multiple bids but a continuing shortage of stock.”
James Watts, at Robert Watts Estate Agents in Cleckheaton, added: “The market conditions have become more buoyant with the extension of the Stamp Duty holiday and demand is far outstripping supply. There is a definite bottleneck as vendors are worried to list for fear of not finding something suitable to buy, which is exacerbating the problem with supply.”
In Northern Ireland, James Callaghan at Philip Tweedie and Company in Coleraine, said: “The lack of new instructions, coupled with people reconsidering their living arrangements due to Covid-19, will continue to keep prices on an upward trajectory.”
Lastly, in London, Christopher Ames at Ames Belgravia in SW1, commented: “Vendors are reluctant to put properties on the open market, but will consider “off market” sales activity. There is still a shortage of overseas buyers willing or able to fly to London at present. They are more likely to buy off-plan in new developments.”