House price recovery could lag behind a rebound in sales, surveyors predict

House prices could take longer to recover than sales now that England’s property market has been re-opened for business, a report from surveyors suggests.

The Royal Institution of Charted Surveyors (Rics) said feedback suggests that a recovery in prices could take a little while longer than a bounce back in sales levels, with property professionals suggesting, on average, prices would take 11 months to recover, compared with nine months for sales.

The findings were contained in Rics’s UK-wide April survey, which said 35% of property professionals believed prices could be left up to 4% lower on the re-opening of the housing market, while more than 40% thought prices could fall by more than 4%.

Four-fifths (80%) of surveyors said they have seen buyers and sellers pulling out of transactions due to the coronavirus pandemic.

An overall net balance of 92% of surveyors saw the number of sales being agreed decrease rather than increase in April.

A net balance of 96% reported a fall rather than an increase in new properties coming on the market – the weakest reading since this question started being asked in April 1999.

A net balance of 21% of surveyors saw house prices fall rather than increase in April.

In April, the survey sought views on the potential support measure of a stamp duty holiday from Government as sales restart. Just over six in 10 (62%) believed that a stamp duty holiday would help the market recover post-pandemic, by lifting sales and leaving prices relatively unchanged.

In the lettings market, rents are expected to fall across the UK in the coming three months, but stabilise in 12 months’ time.

In five years’ time, rents are predicted to be increasing by around 2.5% annually, while house prices are expected be increasing by around 2% yearly.

On Wednesday, the Government paved the way for property professionals in England to get back to work, with estate agents now able to reopen their doors and show people around properties, subject to social distancing guidelines.

Despite the easing of restrictions in England, the way people are able to transact has changed.

“Virtual” property viewings are still being encouraged, along with the use of hand sanitiser and regular handwashing for those house hunters who are so interested in a property that they want to physically see it. Some estate agents have said they are allowing visits to branches by appointment only.

Simon Rubinsohn, Rics chief economist, said: “Not surprisingly, the latest survey shows that housing activity indicators collapsed in April reflecting the impact of the lockdown.

“Looking further out, there is a little more optimism but the numbers still suggest that it will be a struggle to get confidence back to where it was as recently as February. Moreover, whether this can be realised will largely depend on how the pandemic pans out and what this means for the macroeconomic environment.”

Hew Edgar, head of UK government relations, said: “Rics last month called on the UK Government to explore confidence-boosting measures for the residential market as it reopens, and the data suggests that our proposal for a stamp duty holiday would be a successful change that would boost transactional activity, helping people move home.

“There are, of course, other options available to Government as they reopen the market, notwithstanding stamp duty options such as reducing or removing stamp duty for downsizers that would kickstart market fluidity, and we look forward to continuing conversations as the market starts to move again.”