Demand grows as stamp duty holiday ends
Potential buyers continued to test the market during March as the stamp duty holiday finally came to an end, says the latest RICS UK Housing Market Survey (9 April 2012).
New buyer enquires edged up in March with 9% more surveyors reporting increases rather than decreases in demand, says the latest survey. This is the highest reading in almost two years and suggests that the final weeks of the stamp duty holiday saw buyers looking to beat the deadline.
Alongside this, the flow of new properties coming onto the market remained stable with a net balance of 2% more respondents reporting rises in new instructions (from +7% more in February). Significantly, many surveyors report that those looking to sell their homes must be realistic in their price expectations if they are to be successful.
Meanwhile, prices continued to edge downward across all areas of the country except London, albeit at a slower pace than in recent months. Ten percent more surveyors reported falls rather than rises in prices, representing the least negative reading since June 2010.
Predictions for future prices across the UK remained flat for the second consecutive month, suggesting that gently increasing levels of demand may be contributing to a more optimistic outlook. However, regional variations were evident with the North, East Anglia and Scotland seeing buyer interest drop, while surveyors elsewhere reported a steady increase.
Significantly, the North West housing market – which has weakened along with much of the country in recent times – saw a notable upturn in activity. Buyer interest reached its highest level since the end of 2009 (net balance +36%) which resulted in an upward shift in price expectations in the region.
Looking ahead, with demand seeing gentle increases across much of the country, expectations for future transaction levels remain positive with a net balance of 20% more surveyors expecting sales to increase over the coming three months.
Demand saw a slight boost in March as many first-time buyers looked to beat the stamp duty holiday deadline. There has been a gentle increase in activity across the market in the early part of the year but it remains to be seen whether this can continue, given the changes in the Budget and ongoing problems affecting the economy.
London continues to outperform the rest of the UK in terms of prices but, interestingly, the North West did see an increase in activity in March.
Simon Rubinsohn, RICS Chief Economist
About the survey
The RICS question on measuring house price changes is as follows: “Indicate by how much average house prices have changed over the last three months.” (Answers being – falling, the same or rising)
The RICS housing market survey is the longest-running monthly survey of house prices in the UK, collecting data since January 1978. The survey is cited by the Bank of England’s monetary policy committee at its monthly interest rate setting meetings.