The RICS July 2021 Residential Survey results reveal a slightly softer month for new activity across the housing market. Although a decline in activity is to be expected following the end of the stamp duty holiday in June, the survey also shows that house prices continue to rise due to lack of available stock, with further increases expected over the next 12 months.
The latest RICS residential market survey shows that buyer enquiries have slowed as the government’s stamp duty holiday begins to taper off. A net balance of -9% of agents saw a fall in July, down from +10% in June, which signals the end of a four-month growth period for the housing market. Agreed sales also declined as a result of diminishing buyer enquiries, with -21% last month across the UK, and sales in Yorkshire & the Humber, the East Midlands and East Anglia slowing the most. Further reports have also signalled a slump in buyer activity across the capital.
Simon Rubinsohn RICS chief economist, said that the survey revealed buyers are continuing to place a premium on space, presumably to facilitate remote working agreements that many companies adopted throughout the pandemic. This provides buyers with more flexibility on location but does mean that their focus is towards specific, larger property types.
“This is being reflected both in the challenge some current homeowners are having in moving up the property ladder as well in stronger price expectations from the RICS survey for larger than smaller properties”, he said.
RICS reports prices are continuing to rise, with the North of England, Wales and East Anglia showing the most growth and London’s latest net balance of +45% was an increase on previous findings.
Rightmove’s latest House Price Index shows a small drop in average house prices nationally compared with the surge of previous months, the first drip in 2021. With buyers no longer making larger stamp duty savings they report that activity remains strong in the mass-market sectors made up of two bedroom and fewer first-time-buyer-type properties and three to four bedroom second-stepper-type properties, where the impact of the SDLT holiday is much lower.
While Summer is traditionally a quieter time for home movers Rightmove predict an autumn bounce in both seller activity and prices. In the first week of August, individual buyer enquiries to agents are up by 56% on the same period in the pre-Covid year of 2019, and down by just 17% on the frenzied post-lockdown 2020 numbers. This snapshot also shows that the number of sales agreed is up by 9% on the same period in 2019. Available stocks for sale still at record lows, with buyer demand hoovering up new supply leading to more properties selling, and selling more quickly.
Tim Bannister, Rightmove’s Director of Property Data suggests that these market conditions mean that home-owners who have yet to come to market and address their new housing needs should act soon to get a better chance of a quick sale at a good price and be in their new home before Christmas.
Rightmove’s analysis shows that the likelihood of sellers finding a buyer remains at, or close to, an all-time high. The average time for a newly listed property to be marked sold subject to contract is the quickest ever at 36 days, which is a whole month faster than in February 2020, which was the last month before the first lockdown. But, he warns, the fierce competition means many sellers are choosing to have a buyer lined up subject to contract before entering the race to secure their own purchase.
He also suggests that there will be an increase in properties coming to market when “owners have more clarity over their employers’ long-term balance of home and office working. Their future housing needs are hard to scope out if it’s still uncertain whether the daily commute is soon going to return. If it’s going to be less restrictive in the long term then that means less need to live close to transport networks, and a greater need for home working space.”
The full RICS report can be accessed here.
