Lack of housing market momentum in December despite tax cut for first-time buyers
Buyer interest edged lower in December as the housing market continued to display a lack of momentum, according to the Royal Institution of Chartered Surveyors.
In December, activity in the UK housing market continued to drop. After new buyer enquiries came close to stabilising in November, 15% more respondents noted a decline in demand (as opposed to an increase) in the month of December.
The trade body also noted little immediate effect on demand from first-time buyers following the changes to Stamp Duty.
Drop in the ocean
An overwhelming majority of 86% of chartered surveyors across the UK said they hadn’t seen an impact on demand from the tax cut.
While this could be in part due to the time of year, respondents were also asked to consider the likely impact on the market over the coming months. Nationally, the majority of respondents (66%) anticipated the change having little consequence, whilst 12% felt it would result in higher overall activity.
Simon Rubinsohn, RICS chief economist, said: “The initial feedback from the market doesn’t suggest that the change in the Stamp Duty regime announced in the budget is going to have a material impact on activity. Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first-time buyer.”
Simon Heawood, CEO of Bricklane.com, added: “Abolishing stamp duty was a drop in the ocean given the affordability challenge of getting Generation Rent onto the property ladder. Increasing supply of the right kinds of housing will also go some way to stopping ever-rising house prices, but many of Generation Rent still face the prospect of waiting many years to buy their own home.”
Agreed transactions also fell across the UK, with 13% more respondents reporting a decline in volumes over the month. Significantly, Scotland, Northern Ireland and the North East region were the only areas to suggest stronger transactions, while sales were either flat or negative across the rest of the UK.
Sales expectations nationally remain flat over the coming three months, but respondents are more optimistic over the year to come, with activity anticipated to pick-up across all regions and countries over the next 12 months.