Sellers put off Putting their Homes on the Market in Advance of the Budget

RICS UK Residential Market Survey, February 2021

  • Sellers deterred from putting homes on market given current restrictions, with demand series also slightly negative
  • Upward pressure on house prices shows no sign of easing
  • Near term sales expectations move into positive territory

Current lockdown restrictions saw sellers holding off putting their homes up for sale, according to the February 2021 RICS UK Residential Market Survey. However, sales activity is expected to rise in the coming three months, helped by an easing in lockdown.*

For the second month in a row, the number of new buyer enquiries fell in February, with the net balance coming in at –9%, (up from -29% in January). The number of properties being listed for sale also fell for the second consecutive month, with respondents anecdotally citing the current lockdown restrictions and waiting on clarity about the stamp duty holiday extension for the reasons behind the fall in appetite. This lack of demand from buyers and sellers saw a broadly flat trend in newly agreed sales, with a net balance of +1% of respondents reporting a rise in completed sales.

Ahead of the Chancellor’s Budget, respondents to the January survey anticipated sales would slow in the coming months as the stamp duty holiday came to an end. However, near term sales expectations moved into marginally positive territory at +6% this month, marking the strongest reading since October last year. Sales volumes are also expected to grow over the next twelve months as a net balance of +16% of respondents anticipate an increase (the strongest net balance since February 2020).

Looking at house price growth, +52% (net balance) of respondents reported an increase in prices in February which is marginally up from +49% in January. The measure is indicative of house price inflation maintaining momentum.

Looking further ahead prices are therefore predicted to climb over the coming year, as +46% of respondents anticipate a rise, up from +30% in January. All UK regions/countries are now expected to see an increase in prices over the year to come.

In the lettings market, a net balance of +26% of respondents cited an increase in tenant demand in the three months to February. At the same time, -28% of respondents reported a fall in landlord instructions. Off the back of this mismatch, rental growth expectations have strengthened, with +37% of respondents envisaging rents to increase in the coming three months. Further ahead, it is expected for rents to rise by little over 2% for the coming year. Rents are projected to rise across all parts of the UK, except for London, where respondents expect them to remain the same.

Simon Rubinsohn, RICS Chief Economist, said: “The measures announced last week by the Chancellor should help support the housing market over the coming months with concerns around a cliff edge end to the stamp duty break eased. However, a very clear message emanating from the latest survey is that more needs to be done to address the shortfall in supply with price and rent expectations very evidently continuing to accelerate. Planning reform, which the government is addressing, alongside supporting a sustainable and inclusive recovery in the economy are key elements in encouraging the private sector to increase the pipeline of new build but it is clear that this is only part of the answer, particularly given the impact of low interest rates on demand. It is critical that a holistic approach is taken to the housing market ensuring that policy is designed to deliver across tenures and indeed to improve the environmental quality of the existing stock through a retrofit programme.”

* three-quarters of responses to the survey were gathered prior to the UK Budget

**Quarterly seasonally adjusted data

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