RICS UK Residential Market Survey, March 2016
Impact of stamp duty changes, EU referendum and devolved elections take toll on housing market
- Short-term confidence in market flattens following winter’s buy-to-let rush
- Survey respondents say uncertainty fuelled by stamp duty changes, a weaker pound, Brexit and devolved elections
- Rate of house price inflation is slowing with RICS indicators pointing to more modest house price gains
UK house price inflation is set for a slow-down over the coming months as the impact of new stamp duty changes, the EU referendum and the forthcoming devolved elections combine to create a climate of uncertainty in the country’s housing market, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has revealed.
These factors have been strongly felt in the North East, where only 4 per cent of the region’s agents expect to see house prices rise over the next three months. Only 17 per cent of respondents in the North East saw buyer enquiries rise last month too, and subsequently only 25 per cent of agents in the region anticipate seeing sales increase over the coming three months.
However, the longer-term outlook suggests that prices will still be expected to rise by more than 4 per cent each year for the next five years across England and Wales, with prices in London projected to grow by a broadly similar amount rising by 3 per cent each year over the same period.
RICS Chief Economist, Simon Rubinsohn, said: “As expected, the buy-to-let rush has now run its course, and as a natural result, the market is starting to slow. But there are other significant factors that are currently weakening short term confidence in the UK property market.
“Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception. However, all indications suggest that whatever the outcome of the forthcoming elections and the referendum, in the long-term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25 per cent over the next five years.”
North East agents who contributed to the RICS Survey also cited Stamp Duty changes, uncertain economic forecasts and the lack of stock as the main catalysts driving the market slow down.
Neil Foster MRICS of Foster Maddison Property Consultants in Newcastle said: “Prices continue to be underpinned by a lack of supply in the upper middle and top end of the North East housing market. Buyers are starved of choice.”
Edward Seymour of Edwin Thompson in Berwick upon Tweed adds: “The local housing market is still uncertain with mixed economic forecasts, but we’re seeing good demand from purchasers.”
Simon Bainbridge MRICS of Savills in Darlington commented: “There has been an improvement in general activity across a broad range of prices, and the 31 March deadline for the changes in Stamp Duty has helped encourage some of the slower moving sales over the line.”
Despite, the increased rates of Stamp Duty Tax now expected to be paid by prospective landlords, rent inflation – while expected to increase – is not predicted to rise any faster than it has in previous months. Although over the next five years, respondents continue to anticipate rents will increase by an average of 4.5 per cent per annum, there is no indication yet that tax increases are being passed on to the tenant. The expected rate of rent of inflation has remained constant for the past year, at around 3 per cent.