"Thanks to the chancellor’s extension of the stamp duty holiday, and the introduction of the 95% mortgage scheme, it’s been another positive month for the housing sector."
Buyer enquiries, agreed sales and house prices have all gained significant impetus following stamp duty holiday extension, with indicators pointing to renewed momentum being sustained over the near term, according to the latest RICS survey results.
Sales market activity picked up sharply in March, with indicators on enquiries, sales and new instructions all improving noticeably compared to last month. Survey participants highlight the extension of the stamp duty holiday as a significant driving force behind this renewed momentum, while a gradual loosening in lockdown restrictions is also said to be contributing to the rise in activity.
At the national level, 42% of respondents cited an increase in new buyer enquiries during March. This is up from a reading of zero previously and marks the strongest return since September last year. Alongside this, new instructions coming onto the market also improved, albeit the pace of growth was not enough to match the pick-up in demand reported. Indeed, a common theme running through the comments left by contributors is that demand is running ahead of supply, and more new instructions will be needed to balance the market going forward.
On that front, a net balance of +29% of respondents noted that appraisals were up on the same period last year (a turnaround on a reading of -19% in February), suggesting more new instructions should be in the pipeline over the next few months.
Agreed sales rose firmly during March, evidenced by a net balance of +50% of contributors reporting an increase. This marks a sharp acceleration compared to last month (net balance +7%) and is the strongest reading since August last year. Looking ahead, near term sales expectations rose noticeably to post a net balance of +35%, up from a figure of +9% in February. The near term sales outlook is now the most upbeat since January 2020, with sales expectations positive across all parts of the UK. That said, this rise in sales looks set to be concentrated over the next few months, with the twelve-month expectations series consistent with more modest growth in sales further ahead.
With regards to house prices, a net balance of +59% of respondents cited an increase at the national level over the latest survey period. This indicator has now risen slightly in each of the last two months, although the latest reading is still slightly below the recent high of +66% posted back in October last year. Prices are reportedly rising across all regions/countries of the UK, with the strongest momentum signalled by respondents in the North West, Yorkshire & the Humber, as well as Northern Ireland.
Given the recent excess of demand over supply, prices are expected to continue on a firmly upward trajectory over the coming three months. At the headline level, 42% of survey participants expect prices to rise further in the near term, up from a reading of +16% previously. At the twelve month horizon, +60% of contributors nationally anticipate higher prices in a year’s time (an increase on +46% returned last month). Twelve-month price expectations are now pointing to significant growth across all parts of the UK, led by particularly elevated readings in Wales, Scotland, and Northern Ireland.
Rich Horner, head of individual protection at MetLife, commented: “Thanks to the chancellor’s extension of the stamp duty holiday, and the introduction of the 95% mortgage scheme, it’s been another positive month for the housing sector. One that could have suffered severely had the stamp duty holiday ended abruptly.
“In the months ahead, we should continue to see a surge in homeownership, particularly as the new 95% mortgage scheme will make buying a home a reality for more first-time buyers. We’re also seeing more lenders offering their own competitive mortgage deals. Despite the success of the measures, potential buyers need to be wary of their affordability and ensure they’re not living above their means, particularly as homes up to the value of £600,000 are eligible under the scheme. If this were to happen, house prices could continue to inflate and, as the scheme is accessible to all types of buyers, first-time buyers could continue to be locked out of the market altogether."