New RICS report offers property market insights as lockdown begins to ease
A new economy and property market update from the Royal Institute of Chartered Surveyors (RICS) says activity is expected to recover quickly as lockdown restrictions are lifted.
Taking a forward look at the real estate and construction industries, the report says that although some long-term impacts due to the pandemic are inevitable, the residential sector is likely to show resilience aided by support measures recently announced in the Budget.
One such measure is the extension of the Stamp Duty holiday which is easing concerns about a ‘cliff-edge’ drop in transactions and means there will continue to be no tax liability on property sales of less than £500,000 until June 2021. After this date, the starting rate of Stamp Duty will be £250,000 until the end of September. Stamp duty will then return to the usual threshold and will apply for properties sold for more than £125,000.
Other key takeaways relevant to the residential property sector:
On a seasonally-adjusted basis, property sales exceeded 120,000 in both December and January which are the largest monthly numbers since 2007 – possibly fuelled by the break in Stamp Duty.
The February RICS Residential Market Survey shows the lockdown slowed the flow of new instructions onto the market. New Buyer Enquiries also slackened over the month. As a result, the Sales to Stock ratio shows an upward trend that in the past has been typically consistent with higher house price inflation.
The rental market is also highlighting similar issues, with RICS data showing tenant demand remaining firm while landlord instructions continue to weaken. This imbalance is being reflected in higher rent expectations, with rents projected to rise by around 2.5% nationally over a 12-month time horizon. London expectations are lagging behind the national picture and now signal a broadly flat trend.
With the restrictions in place as a result of the lockdown, a recurring theme running through the anecdotal feedback is the desire amongst homeowners for more space and green, rather than highly urban, locations.
