U.K. Housing Market Takes a Breather as Tax Cut for Buyers Ends

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The U.K. property market entered a summer lull in August, with a survey showing sales and demand easing as a tax break began to wind down.

The report from the Royal Institution of Chartered Surveyors also found a further drop in the number of homes put up for sale. A shortage of properties is helping to underpin the market, with agents on balance expecting values to keep rising, albeit at a more moderate pace.

The survey is the latest to show the tapering of a stamp-duty holiday on July 1 has done little more than tap the brakes on a housing market that defied the worst economic slump for three centuries. Factors driving demand include low borrowing costs, savings accumulated during lockdowns and a search for larger homes away from populated urban centers.

Prices continued to rise strongly in August, RICS said. Sales expectations over the next year were highest across London and the southeast, which lagged behind other regions of the country during the pandemic.

“The latest survey evidence inevitably points to market activity taking a breather following the flurry of sales seen ahead of the tapered Stamp Duty holiday withdrawal,” said RICS economist Tarrant Parsons. “That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.”

Here’s a roundup of comments made by agents in the RICS survey:

Allan Fuller, from Allan Fuller Estate Agents in Putney, London:

“Demand for family houses remains strong, but less frenetic than during the stamp duty reduction. We have seen an increase in investors buying flats to rent out.”

Christopher Ames from Ames Belgravia in London:

“Housing market activity has stabilized during July/August after the 30th June Stamp Duty Holiday end. There remains considerable demand from overseas purchasers -- many of whom have not been able to fly into the U.K. to view. We are expecting more buyers from Hong Kong , the USA and post Brexit, Europeans.”

John King from Andrew Scott Robertson in London:

“As to be expected, a quieter period all round. Vendors still contemplating their options, with a number who’s confidence on values exceeds their knowledge of the market at present.”

Jeremy Dell, J J Dell & Co in Shropshire: 

“New instructions are very low and the demand for some types of property is manic ie bungalows. I have never known the supply of property to be so short.”

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