Lockdowns, Stamp Duty Holiday Uncertainties Keep UK Housing Market Under Pressure
A recent survey by the RICS reveals an increase in hesitation among potential house sellers during February on account of the pandemic
A recent survey by the RICS reveals an increase in hesitation among potential house sellers during February on account of the pandemic-driven restrictions and stamp duty holiday related uncertainties, which kept them from putting up their houses for sale. The RICS insists that the government needs to make more efforts to combat potential shortfall in supply of houses for sale, which could drive up house prices and rents.
In addition to a decline in houses being put up for sale, the number of new buyer inquiries also declined for the second consecutive month during February. The reduction in activity in the housing sector was driven by the lockdowns and restrictions imposed by the government and the lack of clarity surrounding the stamp duty holiday.
Most of the survey responses were collected before the UK Finance Minister Rishi Sunak announced an extension on the stamp duty holiday from March until June, following which the scheme will be tapered off until September. Presently, the temporary stamp duty threshold for homes stands at £500,000, which will then be reduced to £250,000 beginning in July until the end of September and then return to the old level of £125,000 starting in October.
Despite the lull in the housing market among sellers and buyers, more than half of the surveyors reported an increase in house prices during the month of February. In signs of growing optimism, respondents expect sales to pick up in the coming months while 46% of surveyors anticipate house prices to rise in the coming year.
Chief economist at RICS, Simon Rubinsohn, observes, “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. 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.”
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