Property professionals report they are doing brisk business in the run-up to Christmas, but there are concerns that a sharp slowdown in sales could be around the corner in spring 2021.
The Royal Institution of Chartered Surveyors (Rics) said house sales continued to increase across November, as buyers looked to beat a stamp duty holiday deadline on March 31 2021.
But while demand rose for most of the UK, the pace of this growth does appear to be losing a bit of steam and slowing, it added.
A net balance of 27% of surveyors told Rics they experienced an increase rather than a decrease in new buyer inquiries in November.
While this points to demand continuing to grow overall, the pace of growth is slower than a net balance of 42% of surveyors who reported buyer inquiries increasing in October.
A positive net balance of 25% of surveyors saw sales increase rather than decrease in November. But looking to the year ahead, an overall balance of 21% expect sales to be weaker.
Some are citing rising unemployment and the stamp duty holiday ending in March 2021 as reasons for the subdued outlook, Rics said.
Regionally, agreed sales continued to rise across most areas, with Wales and Northern Ireland seeing particularly strong growth for November.
However, property professionals in the West Midlands, East Midlands and Scotland have started to report a flatter trend in agreed sales.
Demand growth is also putting a significant upward pressure on house prices, with a net balance of two-thirds (66%) of surveyors seeing prices increase rather than decrease.
Expectations for house price growth in the year ahead have strengthened.
A net balance of 20% of surveyors now expect house prices to be higher in 12 months’ time, up from a balance of 8% in October.
Simon Rubinsohn, Rics chief economist, said: “It is clear from responses to the latest survey that there is considerable concern about the prospect of a sharp slowdown in transaction activity following the end of the first quarter of the coming year.
“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.”
In the rental market, demand from tenants remained steady in November, although a net balance of 19% of surveyors saw a fall in landlord properties.
Rents are generally expected to increase – but London is a clear exception to the rest of the UK as surveyors expect rents there to fall over the next three months.
The Rics November report also quoted some commentary from property professionals around the UK – which reflects the variations in local markets.
A York-based professional reported: “A busy run-up to Christmas despite the second lockdown as buyers try to beat the stamp duty deadline.”
A Cardiff-based professional said there was “no sign yet of the expected seasonal slowdown”.
An Ayrshire-based professional commented: “We have started to see one of the busiest periods ever slow down towards the festive period. However, demand continues to be strong for any properties introduced to the market in recent weeks.
“I expect this will continue into the new year and beyond.”
A Belfast-based survey contributor said: “Supply has increased in the last two months and this has absorbed a lot of the demand resulting in a lower level of inquiries. However, the market remains strong in the run-up to Christmas.”
Another, based in Preston said: “We are seeing sustained demand and prices continue to creep higher but there is a feeling that this activity could abate in the spring.”
One in Cheshire reported that the market was “still very busy for late in the year”.
But another in nearby Manchester said: “City centre market being affected by lack of transient buyers and tenants from abroad and other parts of UK due to Covid and lockdown.
“This means we are reliant on local activity and 25% of the market is missing, whereas the suburbs are not affected in the same way.”