Stamp Duty optimism boosts demand for houses in SW
House prices and the number of potential new buyers in the South West rose in December, bucking the general trend across most other parts of the UK, according to the latest RICS Residential Market Survey.
In the region new buyer enquiries turned positive, with 23% more chartered surveyors seeing an increase in December 2014. 22% more respondents in the South West are also seeing prices continue to rise.
Across the UK as a whole, 10% more surveyors saw the number of potential new buyers decrease in December 2014 and London saw the weakest demand with 45% more surveyors reporting a decline in enquiries – the eighth consecutive monthly decline. The North of England also saw a strong rebound in demand but the underlying picture remains most upbeat in Northern Ireland and Scotland.
Despite the slowdown, there is optimism that the Stamp Duty reforms will deliver a 2-5% boost in both sales and prices over the next twelve months, despite members in London expecting sales to decrease by between 5-10% and prices to decrease by 2-5%, with larger properties and/or those in prime areas of the capital expected to see the biggest price decreases.
Sales expectations also remained positive in the South West with 32% more chartered surveyors seeing an increase in December. The volume of agreed sales during December in the South West was also positive, with 9% more respondents seeing a rise and sales expectations for the next three months in the region saw a net balance of +23.
In the month that also saw mortgage approvals fall to their lowest in 18 months, December’s data showed that perceived Loan to Value (LtV) ratios across properties for first-time buyers and existing home owners remained stable in the South West at 83.8% and 78.3%.
Roger Punch, South West Residential spokesperson, commented: “Confidence appears to be steady, with a seasonally unusual strong midwinter market. The ripple seems to be moving west and suggests that we will have a good Spring ahead. In some areas, however, many properties remain optimistically priced and do need adjustment if they are to sell.”
Simon Rubinsohn, RICS Chief Economist, said: "The changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country but there remain significant challenges particularly for first time buyers seeking to take an initial step onto the property ladder.
"Critically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in ten of the last twelve months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather higher sales.
"The RICS lead indicators do provide some encouragement that the level of housebuilding will continue to increase over the course of this year but even with further growth, the volume of home starts will still fall well short of the number of new household being formed let alone making a dent in the historic shortfall of housing across all tenures.
"The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance. An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices.
"Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping to underpin the rental outlook for landlords pretty much across the whole of the country.”
