The government’s decision to extend the stamp duty holiday lifted property sales and prices in March, the Royal Institution of Chartered Surveyors has reported.
Demand outstripped supply as buyers rushed back into the market to take advantage of the relief. In the institution’s latest survey, a net balance of 42 per cent of agents cited an increase in new buyer enquiries in March, up from a flat reading in February and the highest figure since September last year.
In his March budget, Rishi Sunak said that the relief, which raised the threshold for stamp duty payments to £500,000, would be extended for three months beyond the original deadline of March 31. After the new deadline on June 30, it will be tapered until it comes to a complete end on September 30.
The property market had been starting to cool ahead of the March deadline, but the figures suggest that buyers have rushed back to take advantage of the extension. However, the institution said that sellers had been less sensitive to the announcement. “The pace of the rise in new instructions didn’t match the rate of demand growth, leading to an increase in prices,” it noted.
A net balance of 29 per cent of surveyors reported that appraisals were up on the same period last year, suggesting that more houses should come on to the market in the coming months. Agreed sales also rose sharply, with a net balance of 50 per cent of respondents reporting an increase, the strongest reading since August last year.
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A net balance of 59 per cent said that prices had risen during the month, with the strongest momentum registered in the northwest, Yorkshire and the Humber and Northern Ireland. A net balance of 42 per cent anticipate an increase in the near term.
Although the property market has been resilient, economists expect it to lose momentum when the stamp duty relief is withdrawn.
Martin Beck, at Oxford Economics, the consultancy, said: “The unexpected resilience of house prices last year sets 2021 up to be another year of rising values. But unsupportive macro factors and the end of the stamp duty holiday lead us to suspect some correction may not be long in coming. We see prices falling by 4 per cent to 5 per cent in 2022.”
