Britain’s surveyors have made a plea to the government to introduce a stamp duty holiday once the lockdown ends, as they warned that house sales and prices could slide for the next 12 months.
In a reversal to the first two months of the year, when the Royal Institution of Chartered Surveyors (RICS) was reporting a buoyant market, it found that a large net balance of members believe house prices will now fall over the next 12 months. They also predict a small fall in rents in the near term, although they will then flatten out over the next year.
Estate agents have closed their doors during the current lockdown, and buyer demand has also plummeted, said Rics.
Rics tracks sentiment using a “net balance” of responses from surveyors. It found that while in February a net balance of +21% of surveyors were predicting near-term property price rises, that figure collapsed to -82% in March. Looking at prices over a 12-month time frame, the net balance remained negative at -38%, indicating further falls.
Rics believes that government intervention is likely to be needed to bring back the housing market once the virus recedes, with “normality” still a very long way off.
Hew Edgar, Rics head of government relations said: “Rics is not an organisation that would call for a stamp duty holiday on a whim. As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down. A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”
Zoopla, the property portal, said new listings on its site in the first week of April dived by 83% compared with the same week a year ago.
Surveyors report a mixed picture on sales that were going through when the virus hit. Some buyers have continued to honour agreements, but others have dropped out.
“Virtually all our under offer stock is still progressing at the original agreed prices,” said Chris Charlton at Savills in Nottingham, while Rob Swiney, of Lacy Scott and Knight in Suffolk, said: “Market was going great guns before we went into lockdown, interestingly not many sales fallen through.”
Nigel Anderson of Anderson Hacking in Rye, East Sussex said: “Sales that are in solicitors’ hands are stalling and not exchanging as purchasers wait to see outcome of the market.”
The market freeze has left many agents in despair. Many responded to the Rics monthly survey with unusually blunt one-word responses, such as “catastrophic”.
In Leicester, Andrew York, of Moore & York, said: “The market is entering a phase of complete disruption and possible meltdown”.
Earlier this week, in one of the first major assessments of the market by a major forecaster, Knight Frank said it expected transactions to tumble by more than a third this year and prices to slip by 3%.