UK housing boom slows down as lockdown 'chill' hits market

Tom Belger
·Finance and policy reporter
·2 min read
Award-winning homes in Norwich. Photo: Jim Stephenson/View Pictures/Universal Images Group via Getty Images
Award-winning homes in Norwich. Photo: Jim Stephenson/View Pictures/Universal Images Group via Getty Images

Britain’s housing market boom continues to cool as the latest lockdown restrictions send a “chill cloud” over the sector, surveyors and estate agents say.

The scale of the surge in property-buying activity in the second half of 2020 surprised economists amid a severe economic downturn, with huge demand for home moves since COVID-19 hit and savings from stamp duty cuts.

A new report by the Royal Institute of Chartered Surveyors (RICS) shows continued momentum in December, with a majority of members experiencing growth. But the +15% net balance score shows a fifth month in a row where the majority has narrowed, with a growing proportion of firms experiencing lower demand. The figure had stood at +26% in November.

Agreed sales continued to rise but also at a lower pace than in November, while only a slim majority of firms reported a rising number of new property listings and appraisals.

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Most firms now expect sales to decline over the next three months with lockdown curbs tightening. Simon Rubinsohn, RICS chief economist, said the figure would have been expected to remain in positive territory given the looming expiry of stamp duty cuts at the end of March.

Some buyers may fear running out of time amid some reported delays in processing transactions, but renewed concerns about the economic and social impact of the resurgent virus and restrictions could also play a part. December saw curbs gradually tightening in parts of the UK under the tier system, before another nationwide lockdown was announced this month.

John Brown, a chartered surveyor and development consultant in Edinburgh, said in his response to the RICS survey: “The market never likes December, add current issues of tiers and worries over new variants of Covid, the general conditions pertain to a quiet residential market.

“The halcyon days of autumn and end of summer markets [are] now over. The chill cloud of January awaits.”

Evidence of property price gains was far more widespread than sales growth, with a net balance of 65% of RICS members reporting higher prices. RICS said it showed “significant upward pressure” everywhere in the UK bar London, where price inflation is “muted” and only a small majority of those polled reporting gains.

“The feedback from RICS members is that the uplift in prices over the past year will be sustained, for good or ill, as the macro picture gradually improves on the back of the rollout of the Covid vaccination programme,” said Rubinsohn.

“More significantly, private rents are envisaged to outpace price gain as supply continues to fall short of demand with anecdotal reports of landlords exiting the market.”

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