Housing market predicted to cool this year

The housing market is predicted to slow down after the new stamp duty charges come into force in April, according to surveyors.

The Royal Institute of Chartered Surveyors said that following the short-term rush on buy-to-let properties its members expect the market to cool down over the next three months.

House price inflation peaked last December ahead of an anticipated rush to beat buy-to-let tax rises.

Simon Rubinsohn, chief economist at RICS, said: “Since the Chancellor made his Autumn Statement announcement last November, investors have rushed to purchase homes before the stamp duty surcharge comes into effect. It is inevitable that over the coming months, April’s stamp duty changes will take a little of the heat out of the investor market.”

The highest price increases were in East Anglia, with 91% of respondents reporting prices rises over the past month. London and the North East recorded very modest gains.

Surveyors still expect house prices to rise by a further 25% over the next five years. The South West also recorded the highest rise in sales across the UK for the last three months.

“Anecdotal evidence has suggested that a combination of exogenous factors is contributing to the overall picture in prime London, with tax changes, foreign market slow-downs and uncertainty over Brexit all being mooted as potential reasons behind the changes in demand. This is not necessarily indicative of the long-term market and the depreciation of the pound could encourage overseas investors back in to the market as could the outcome of the European referendum,” said Rubinsohn.

Andy Sommerville, director of Search Acumen, said: “As expected, the residential market is now planning for the surge in buy-to-let purchases to begin tailing off. The rush is coming to an end as the April deadline nears, and this is likely to have a short term impact on sales and possibly prices over the next few months. This isn’t a slump by any means – new instructions and buyer enquiries continued to climb in February – but we may soon see a short lull in sales and price growth.

“But let’s not forget that the demand isn’t all from landlords. Help to Buy is making it easier for first-time buyers to get onto the property ladder, and in London especially many are seeing the benefits of buying a property through Help to Buy rather than rent.

“Over the longer term, the impact of the buy-to-let surge and subsequent lull will be minimal. The structure of the property market and the pressure on the supply of new homes, particularly in the capital, is likely to see the long-term trajectory of sales and prices continue upwards.”