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Housing market set for slowdown after stamp duty changes come into action

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An estate agent window
Activity on the housing market will slow after April, according to Rics CREDIT: PA

The UK housing market will slow down after April after “a surge in buy-to-let activity”, as the increase in stamp duty for second homes is introduced.

Only 17pc of respondents to a survey of members of the Royal Institution of Chartered Surveyors (Rics) expect to see an increase in house sales in the next three months. Just 21pc foresee price rises in the same period, due to a cooling off of investor interest.

Simon Rubinsohn, Rics’ chief economist, said: “Over the past three months, we have witnessed a surge in buy-to-let activity. Since the Chancellor made his Autumn Statement announcement last November, investors have rushed to purchase homes before the Stamp Duty surcharge comes into effect.

“It is inevitable that over the coming months, April’s Stamp Duty changes will take a little of the heat out of the investor market.”

For Sale signs

 

The survey found that the number of properties coming to market has increased slightly for the third consecutive month, as has the number of sales, due to a short-term rush to buy properties before the April 1 deadline.

Prices also rose in February, with 50pc of those surveyed reporting a rise in prices, rather than a fall.

The Rics UK residential market survey is viewed as very reliable in forecasting market activity, and charts the sentiments of its members in sales and lettings.

Respondents to the survey concluded that house prices in London are stabilising; while 50pc more surveyors reported an increase in housing prices nationally, just 3pc respondents in the capital reported a rise.

Outer boroughs of London are tracking the positive national trend more than those in prime central London, according to the survey.

Mr Rubinsohn added: “The challenges facing the top end of the capital’s property market are clearly visible in our latest results. However, it is evident that the broader London market remains firm in the face of the on-going shortage of stock and pent up demand.”

Adrian Gill, head of estate agency Your Move, reported that home sales in February were up 9.3pc compared to last year, according to the Acadata house price index. He said that this was “due to the impending stamp duty hike”.

House keys

 

He added: “The biggest boost in property purchases of any region has been in Poole, with a 21pc upswing in sales.

“Luxury flats with views over Poole Harbour and Sandbanks have seen the biggest growth, as wealthy buyers seek to avoid the additional stamp duty surcharge which will apply to second homes, as well as buy-to-lets.”

Meanwhile, research by carried out by the Centre for Economics and Business Research (Cebr) estimated that in 10 years’ time the average rental deposit will reach £1,111, which equates to 70pc of the forecast monthly income at £1,576.

In London, deposits are projected to rise to £2,733, which would amount to 120pc of the predicted monthly salary of £2,281. Respondents to the Rics survey expected rents to rise by approximately 4.5pc per year for the next five years.

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