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House prices hit four-year high as Stamp Duty holiday fuels surveyor activity

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Sat 12 Sep 2020

House prices hit four-year high as Stamp Duty holiday fuels surveyor activity

Record levels of surveyors are reporting house price increases as enquires, instructions and agreed sales continue to rise amid the Stamp Duty holiday, RICS has revealed.

The latest RICS Residential Market Survey shows 44% of respondents reported an increase rather than a decrease in prices last month, the strongest reading since 2016.

This was buoyed by a net balance of 61% reporting a boost in sales agreed, while buyer enquires and instructions are also increasing

Increasing numbers of surveyors are expecting more activity in the next three months, with 61% of respondents expecting a rise rather than a fall.

The majority, 78% of respondents, said properties listed below the current Stamp Duty threshold of £500,000 are selling for at least level with asking prices, up from 63% in January.

A third of respondents said they are seeing sales prices come in below asking price for properties worth between £500,000 and £1m.

For properties listed at more than £1m, 51% of contributors noted sales prices below asking.

The strong level of sales is also keeping the amount of stock on agency books close to its record low of 42 properties on average, RICS said.

However, surveyors are more uncertain about the next 12 months. A net balance of 17% expect a reduction in sales over the next year, with anecdotal evidence suggesting concerns over the broader economic climate.

Simon Rubinsohn, chief economist for RICS, said: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months.

“More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.

“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.”

Commenting on the report, Marc von Grundherr, director at Benham and Reeves, said: “The UK housing market continues to gather pace with the momentum of a runaway freight train, and the fuel of a Stamp Duty reprieve is not only enticing buyers to act, but it’s causing homes below the £500,000 threshold to sell for a very good price.

“This is a stark contrast to the large discounts sellers were forced to offer during the protracted period of political uncertainty caused by Brexit, suggesting that the current upward trend of positive price growth will remain for the remainder of the year.

“Although London may take a while longer to build the momentum seen in other areas of the UK, house price growth in the capital tends to accelerate at a far quicker pace once the pendulum starts to swing into positive territory.”