‘Considerable concern’ over prospect of sharp drop in house sales

Mounting concern among estate agents that property market could stall in the new year as queries from home buyers wane

  • Surveyors worried about the prospects for the housing market next year
  • Prices continuing to rise in most parts of Britain but demand slowing
  • Stamp duty holiday and furlough scheme come to an end on 31 March 2021 

Surveyors warn that the withdrawal of the stamp duty holiday and the end of the Government’s furlough scheme at the end of March next year look set to put the brakes on the ‘mini-boom’ the property market has enjoyed this year. 

Average property prices continued to rise ‘sharply’ in most parts of the country last month, but buyer demand is showing some signs of losing steam as the year draws to a close. 

Wales and the South West of England continued to see values rise strongly last month, but sales levels in Scotland and the Midlands are already starting to tail off, the latest survey from the Royal Institute of Chartered Surveyors showed.

Price predictions: House price projections for the UK over the next year, according to Rics

Sales: A chart showing property sales levels in Britain since the year 2000

Sales: A chart showing property sales levels in Britain since the year 2000

Variations: A chart showing what's happened to house prices where you live in recent months

Variations: A chart showing what’s happened to house prices where you live in recent months

Simon Rubinsohn, chief economist at the Rics, said there was ‘considerable concern’ among surveyors about the prospect of a marked slowdown in sales levels in the housing market after the end of the first quarter of 2021.

He added: ‘A scaling back in direct government support for the market is part of the reason for this but it is being compounded by expectations of material rise in unemployment as redundancy programmes begin to take effect. 

‘Meanwhile, there is little sense that the projected softer sales picture will feed through into pricing which is viewed as likely to prove rather stickier in the face of ongoing macro challenges.

‘A key issue as government looks to continue to build the delivery pipeline will be the response of developers to a tougher market without the incentive of the stamp duty break and the tapering of the Help to Buy scheme.

‘Critically, it is not simply a numbers game with the latest price moves highlighting ever more acute affordability issues and the importance of ensuring adequate provision across tenures.’

Summing up the state of flux the housing market is in at present, Allan Fuller, of Allan Fuller Estate Agents in London, said: ‘Demand for houses has been strong, but fewer enquires as we get towards the end of 2020. Transactions slow and not all will make March stamp duty deadline.’

Richard Michael Smith, of Allied Surveyors in Scotland, said he thinks there will be a ‘marked downturn’ in sales activity over the next few months.  

Stock issues: The level of stock on estate agents' books continues to be a problem

Stock issues: The level of stock on estate agents’ books continues to be a problem

Fresh sales: A chart showing the level of newly agreed property sales in the last month

Fresh sales: A chart showing the level of newly agreed property sales in the last month

What’s been happening in the housing market?

On the price front, nearly 70 per cent of survey respondents said they had seen house prices rise in their area in November. More experts than before think house prices look set to continue to rise over the next year, but significant concern remains about how the end of the stamp duty holiday will affect the market.

Prices rose strongly in Wales and the South West of England last month, while prices in London also grew, but at a much more moderate pace. London’s average house prices hit a record high of £496,000 in September, recent figures from the Office for National Statistics show. 

Fresh findings from the Rics published today suggest that the pace of enquiries from new buyers slowed last month. 

While many property insiders still saw sales levels rise in November, a growing number also said they think numbers will drop off next year.  

‘Some are citing rising unemployment and the UK Government’s Stamp Duty holiday ending in March as reasons for the subdued outlook’, the Rics said.

In terms of how different parts of the country are performing, newly agreed sales continued to rise across most areas, with Wales and Northern Ireland seeing ‘particularly strong’ growth for November. 

But, surveyors in the West Midlands, East Midlands and Scotland have started to report a flatter trend in agreed sales. 

In the lettings market, demand from prospective landlords dwindled last month, while tenant demand remained steady. Most surveyors surveyed by the Rics said they think rental costs will rise again next year.