Property market cools as new buyers disappear

12-8-2021

Buyer demand drops as stamp duty holiday phased out

Britain's previously booming property market has started to cool for the first time in months after the tapering of the stamp duty holiday dampened demand.

New buyer inquiries shrank over July, according to the Royal Institution of Chartered Surveyors, with the majority of the trade body’s members seeing fewer inquiries than in the previous month.

As a result, the number of agreed sales also dipped, with sales volumes slowing most notably in Yorkshire & the Humber, the East Midlands and East Anglia.

Meanwhile, the number of properties on the market fell for the fourth consecutive month. 

This restriction in supply meant prices climbed further, with 78pc of Rics members reporting that house prices had risen in their area. This number had dropped by 4 percentage points compared to previous month however, potentially reflecting reduced demand.

Despite the softening of demand, most Rics members expected prices to rise throughout the year ahead.

Rics’s Simon Rubinsohn said: “Although the tapering in stamp duty is beginning to have some impact, the overall tone to the market remains firm with the metrics capturing price expectations showing few signs of wavering.”

The property market boom had been underpinned by those looking for larger homes with gardens, according to property website Rightmove.

However, demand for this type of property has dropped dramatically - the number of sales agreed for detached homes is down by 20pc compared to June and July 2020, it said.

Meanwhile, the number of agreed sales for flats was up by 14pc in June and July compared to the previous year, and up by 24pc compared to the same period in 2019. 

Rightmove said this was a result of restrictions easing and people returning to their places of work. The average asking price of a flat has climbed by just over £2,000, or 1pc, since the start of the pandemic to £277,302.

Meanwhile, the asking price of a detached home has climbed by almost £46,000, or 10pc, over the same period to £517,000.

Rightmove’s Tim Bannister said: “In the first few months of the housing markets reopening across Great Britain last year, flats were temporarily out of favour as people sought bigger homes with more space further out, but we’re now seeing this trend start to shift back again.

“The sharp rise in average asking prices for detached homes comes as no surprise, and with available stock still limited and strong demand continuing, we’re unlikely to see prices fall for this type of property anytime soon.”

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