RICS Warn Property Boom Could Lead To Negative Market Economy
A up-to-date influential market report echoes a stark warning to the conveyancing sector confirming the upsurge in the residential property sales will not continue once support from the Government is removed.
The Royal Institution of Chartered Surveyors (RICS) published their latest market report which comprised of a sentiment survey measuring the opinions of responding surveyors.
The RICS report showed the sector was in a ‘boom’ phase as 75 per cent of respondents have recognised the market has rapidly got busier over the past month. Also, new instructions listed on the sales market rose sharply, proved by 59 per cent of respondents reporting a rise.
Furthermore, nationally, 57 per cent of respondents saw an in increase in agreed sales in July.
Collectively across the UK, 12 per cent of respondents said they had seen house prices go up during July and house prices had increased in all areas of the UK, apart from London.
Following last month’s announcement by chancellor Rishi Sunak that purchasers in England and Northern Ireland would pay no stamp duty on properties up to £500,000, until the end of March 2021, increasing numbers of surveyors are now reporting more enquiries, instructions and sales since the Stamp Duty threshold was raised.
However, while 26 per cent more predicted an increase rather than drop in sales over the next three months, 10 per cent believe activity would decline instead of rise on a longer-term outlook of 12 months.
Property website Home.co.uk analysed their data, revealing new sales instructions were “exceeding normal levels” and properties were not staying on the market very long and buyers were putting in offers very close to asking prices, however, RICS research suggests this may not last into next year.
But there are already increasing fears about how long the ‘boom’ we are currently experiencing will last. RICS are concerned as its survey’s 12 month sales projection has not changed and still remains negative.
Generally, those who responded voiced their concerns about the future prospects for the UK economy and the affect it will have on employment rates once the furlough scheme ends in the coming months along with the Stamp Duty holiday finishing next year.
Simon Rubinsohn, RICS chief economist sends out a cautious warning. He says:
“The strong impetus provided to the housing market is evident both in the results of the RICS survey and many of the anecdotal comments from respondents. However, it is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll”
“Significantly, some contributors are now even referencing the possibility of a boom followed by a bust” he warns.