Market losing steam as RICS worries about slowdown in 2021
The sales market is currently strong but the Royal Institution of Chartered Surveyors has issued a warning about a slowdown next year when the stamp duty holiday ends.
“There is considerable concern about the prospect of a sharp slowdown in transaction activity following the end of the first quarter of the coming year” says Simon Rubinsohn, RICS chief economist.
“A scaling back in direct government support for the market is part of the reason for this but it is being compounded by expectations of material rise in unemployment as redundancy programmes begin to take effect. Meanwhile, there is little sense that the projected softer sales picture will feed through into pricing which is viewed as likely to prove rather stickier in the face of ongoing macro challenges” he continues.
The latest monthly RICS market snapshot – which is a sentiment index, reflecting surveyors’ views of demand, supply and prices – shows that the sale of homes continued to increase over November.
However, while demand rose for most of the UK “the pace of this growth does appear to be losing a bit of steam and slowing” says the institution.
Nationally a net balance of 27 per cent of surveyors told RICS they experienced an increase in new buyer enquiries during November, well down on the net balance of 42 per cent in October.
In addition, while precisely a quarter of responses saw an increase in agreed sales over the month, expectations for the year ahead remain negative with a net balance of 21 per cent of surveyors foreseeing weaker sales in the year ahead.
Regionally, agreed sales continued to rise across most areas, with Wales and Northern Ireland seeing particularly strong growth for November. However, respondents in the West Midlands, East Midlands and Scotland have started to report a flatter trend.
House prices saw significant upward pressure, with a net balance of 66 per cent of responses citing an increase; a net balance of 20 per cent of surveyors now envisage prices rising in 2021, a big rise from the eight per cent in October
Rubinsohn continues: “A key issue as government looks to continue to build the delivery pipeline will be the response of developers to a tougher market without the incentive of the stamp duty break and the tapering of the Help to Buy scheme.
“Critically, it is not simply a numbers game with the latest price moves highlighting ever more acute affordability issues and the importance of ensuring adequate provision across tenures.”