The government's recent changes to Stamp Duty for first-time buyers have had little immediate effect on the UK's housing market, according to the RICS.
What’s the latest?
Housing market activity continued to decline in December as the shortage of homes for sale intensified.
The number of properties being put on the market fell for the 23rd month in a row, according to the Royal Institution of Chartered Surveyors.
At the same time, estate agents reported a drop in new inquiries from potential buyers and a further decline in agreed sales.
There were also few signs that the Chancellor’s stamp duty break for first-time buyers had had much impact on the market.
Why is this happening?
The property market has been dogged by a shortage of homes for sale for nearly two years and the situation is having a significant negative impact on activity.
The lack of choice for potential buyers is deterring existing homeowners from trading up, which in turn reduces the availability of properties for those lower down the ladder.
The shortage of homes has also exacerbated the mismatch between supply and demand, forcing prices higher and creating affordability issues, particularly for first-time buyers and those trading up to their second home.
Who does it affect?
While the headline figures point to a lack of momentum in the housing market, there continued to be significant regional variations.
The number of sales agreed increased in Scotland, Northern Ireland and the north east, while they remained flat or declined in all other areas.
Simon Rubinsohn, RICS chief economist, said: “Challenges over affordability may have grown across the UK but they are clearly having a bigger impact in some parts of the country than others.
Sounds interesting. What’s the background?
While estate agents were fairly downbeat about the property market in December, they were more optimistic about its prospects going forward.
Sales activity is expected to pick up in all regions of the country in the coming 12 months, including London which recorded its first positive reading since June last year.
Agents were also more upbeat about the supply situation with 23% noting an increase in the number of appraisals they had carried out compared with December last year.
But despite reporting a slight increase in house prices in December, the majority of estate agents are expecting further declines in property values during the coming three months.
Meanwhile, in the rental market, tenant demand continued to fall, but new instructions from landlords dropped at a faster rate. As a result, rents are expected to continue to increase in the first quarter of the year.
Top 3 Takeaways
- Housing market activity declined in December as the shortage of homes for sale intensified
- The number of properties being put on the market fell for the 23rd month in a row
- There was also a drop in new inquiries from potential buyers and a further decline in the number of sales agreed
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