Country houses for sale

Is the housing market cooling off? Softening in buying and selling amid Lockdown 3.0, home schooling and the Stamp Duty holiday crush

After soaring in the latter half of 2020, the housing market in Britain now appears to be cooling off, according to the latest survey by the Royal Institute of Chartered Surveyors. Carla Passino reports.

The UK property market has stalled for the first time in months, according to the latest survey by the Royal Institute of Chartered Surveyors. Agents around the country indicate that enquiries, sales and new instructions have all fallen for the first time since May 2020.

‘The latest RICS survey suggests that, despite attempts to keep the housing market open through the latest lockdown, there has been perhaps an inevitable impact on the level of activity in the sector, with both enquiries from potential buyers and new instructions slipping back,’ says Simon Rubinsohn, the RICS’s Chief Economist.

‘Lockdown has deterred sellers from placing their property on the market until restrictions are eased,’ notes Ian Morton of Bradburne & Co in St Andrews. ‘Purchasers are window shopping during their exercise hour or online with virtual viewings but hesitant to view in person as expected.’

Tom Bill of Knight Frank believes that the wave of activity recorded last year after the end of the first lockdown has now worked its way through the market with the third lockdown, and the closing window of the stamp-duty holiday contributing to slow things down.

‘Home-schooling means selling a property has taken a back-seat for many people and the ticking clock of a stamp-duty holiday will have deterred others in the belief they won’t make the deadline.’

Covid restrictions have also had an impact on supply, according to David Cruickshank of D M Hall LLP in Elgin, who saw sales continue at a similar pace to the second half of 2020, but also noted ‘a marked drop in the quantity of homes being placed on the market during January, when compared to January 2020’.

“Despite attempts to keep the housing market open through the latest lockdown, there has been perhaps an inevitable impact on the level of activity in the sector”

Despite this general weakening, prices have continued to rise, with 50% more respondents reporting an increase over those that reported a decrease. However, the jury is out among agents over what will happen in coming months.

Mr Rubinsohn notes that ‘the actual transaction numbers will remain firm over the next couple of months reflecting the completion of deals that in many cases were agreed through the back end of last year. The appeal of properties with more room and outside space is, meanwhile, a theme that continues to be strongly evident in the responses to the survey.’

Among the survey respondents, a marginally higher number of agents (4%) expect sales to remain flat for the next 12 months. Some, like Kirsty Keeton of Richard Watkinson & Partners in Newark, think there is potential for a surge [in instructions] when lockdown eases with the spring market’.

However, others think the softening will continue and may eventually affect pricing. ‘We expect prices to be flat over the course of this year as demand becomes steadier and more seasonal in the second half of the year,’ says Knight Frank’s Mr Bill.

Prospects are gloomier for the immediate future: among the agents polled by the RICS, 29% more agents predicted ‘a decline in sales and a challenging period ahead’, compared with those that expected a rosier future.