There was a sharp increase in sales agreed during March, following the chancellor’s extension to the stamp duty holiday, according to the latest index from the Royal Institution of Chartered Surveyors.
A net balance of +50 per cent of the surveyors questioned reported an increase in sales, which is the strongest reading since August last year.
Respondents are anticipating sales activity will continue to rise over the coming three months, with a net balance of +35 per cent forecasting increases, the most upbeat reading since January 2020.
New buyer enquiries also surged, with a balance of +42 per cent of respondents recording an increase compared to 0 per cent the previous month.
This was the strongest figure since September 2020.
But the pace of new instructions did not match the jump in interest from buyers, leading to a gap between supply and demand and rising prices.
A net balance of +29 per cent of surveyors reported that appraisals were up on the same period last year, suggesting more new instructions should come onto the market in the coming months.
Meanwhile, +59 per cent of respondents reported a rise in prices over the past month.
Surveyors responses suggest rising prices across all parts of the UK, with the strongest momentum in the North West, Yorkshire & the Humber and Northern Ireland.
This upward trajectory is expected to continue with +42 per cent of surveyors predicting prices will increase over the next three months and +60 per cent saying they will rise over the next year.
In the rental market, +36 per cent of respondents recorded increased tenant demand, up from +26 per cent in February.
New landlord instructions were down according to a net balance of -25 per cent, resulting in upward pressure on rents.
A net balance of surveyors +47 per cent expect rents to rise.
The only part of the UK where rents are expected to remain flat or fall was London.
Rics chief economist Simon Rubinsohn says: “The results show that the decision of the chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market with all the key activity indictors rebounding in March.
“However the headline numbers as well as the anecdotal remarks from respondents clearly demonstrate that across much of the market, demand is outstripping supply and that as a result, prices continue to move upwards.
“More worryingly, this is also being reflected in the price expectations data both at the twelve months horizon and beyond.
“Meanwhile the lettings market is displaying a broadly similar characteristic in terms of the relationship between demand and supply according to theRics data with the notable exception of the numbers for London.
“Significantly despite rents moving higher, contributors continue to point to the less favourable environment for investors in the market as playing a key role in fuelling this imbalance.”
Wayhome chief executive Nigel Purves says: “While we are seeing a new-found confidence among many buyers and sellers, sadly this just isn’t the case for a large proportion of aspiring homeowners across the UK.
“Even with the stamp duty extension for an extra three months spurring on hopeful home buyers, there are many who find themselves overlooked and ignored due to their household income not meeting a mortgage lender’s criteria.
“This is despite them already having a deposit saved and being able to afford the equivalent of mortgage repayments in rent each month. More needs to be done to level the playing field and provide people with alternative routes into home ownership.”
Metlife head of individual protection Rich Horner says: “Thanks to the chancellor’s extension of the stamp duty holiday, and the introduction of the 95 per cent mortgage scheme, it’s been another positive month for the housing sector – one that could have suffered severely had the stamp duty holiday ended abruptly.
“In the months ahead, we should continue to see a surge in homeownership, particularly as the new 95 per cent mortgage scheme will make buying a home a reality for more first-time buyers.
“We’re also seeing more lenders offering their own competitive mortgage deals. “Despite the success of the measures, potential buyers need to be wary of their affordability and ensure they’re not living above their means, particularly as homes up to the value of £600,000 are eligible under the scheme.”
Original Article from Mortgage Strategy 08/04/2021