Supply of fresh buyers and sellers in housing market shrinks in early 2021

Fresh supplies of potential home buyers and sellers dropped off significantly at the start of 2021, despite the housing market remaining open for business, a report has found.

An overall net balance of 28% of property professionals reported new buyer inquiries falling rather than increasing in January, the Royal Institution of Chartered Surveyors (Rics) said.

This brought to an end a seven-month run of positive growth, signalling a noticeable drop-off in demand.

New property listings were also down, with a net balance of 38% saying that there had been a decline.

Before January new instructions had increased, to a greater or lesser degree, in each report since May 2020.

A net balance of 18% of surveyors observed sales dropping off rather than increasing.

The East Midlands, the south-west of England and Yorkshire and the Humber all returned particularly poor readings on this measure, while the feedback remained more resilient in Northern Ireland.

Rics’ report said comments left by its survey contributors suggest “the overall situation around the pandemic at present is deterring would-be buyers and vendors”.

A stamp duty holiday deadline is also due to end on March 31, with other reports suggesting that this could lead to a cliff edge in sales.

Despite the gloomy economic outlook, UK house prices have generally been driven up, with a net balance of 50% of participants seeing an increase rather than a decrease in January, the report said.

But in London a net balance of 9% of surveyors noted a fall in prices, marking the first negative reading for price growth there since July 2020.

Simon Rubinsohn, Rics chief economist, said: “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 inquiries from potential buyers and new instructions slipping back.

“That said, 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.”

The report also quoted the views of property professionals with one based in Edinburgh saying: “I feel the market will remain relatively static for the foreseeable or until at least we have the vast majority of the country vaccinated.”

Another, based in Belfast, said: “Sales have been very strong, especially in new builds and refurbished homes”.

And a Cardiff-based professional noted a “slow start to the year until mid-January, when (a) noticeable increase in activity (was) experienced”.