The squeeze from too many people looking for a new house and a paucity in supply continued in May, according to the latest RICS UK Residential Market Survey.
The survey found that 32 per cent of respondents noting an increase in prospective buyers, but with a net balance of -21 per cent of respondents reporting another fall in the number of new listings being brought to market.
In a statement, RICS said that the current sales boom was being fueld by the Stamp Duty holiday, but was now ‘turned flat’ as it came to an end.
Simon Rubinsohn, chief economist at RICS, said: “Ending a tax break always has the potential to be a little disruptive for a market but with the economy performing better than could have been expected even a short while ago and the cost of money still at rock bottom levels, the principal drivers supporting demand will remain in place even after the expiry of the stamp duty holiday. More challenging is the question of supply, a theme coming back strongly from respondents to the survey both with regard to the sales and lettings markets.”
Industry comment, as always, was varied.
Sarah Cole, personal finance analyst at Hargreaves Lansdown, said: ““Buyers are getting increasingly desperate in their hunt for a new home, as the number of properties for sale continues to dry up. The imbalance between buyers and sellers is at its worst for seven and a half years, which is a recipe for price rises and panic.”
She added: “It’s an incredibly toxic environment to buy in, because bidding wars are a classic way of ensuring you pay over-the-odds and part with more money than you can afford. Buyers need to take real care not to get carried away. You need to bear in mind that prices won’t rise like this forever, and when the market calms, you need to be happy with your decisions.”
Others were critical. Rich Horner, head of individual protection at MetLife, said the current situation was a ‘frenzy’. He added: “changes to the stamp duty holiday from June 30th may contribute to the market slow down and see buyers change tact. Demand for more space and a better work life balance has driven changes in buyer behaviours but with suggestions that a return to the office full time could happen within a few years, buyers and investors can be safe in the knowledge that rental yields and house prices in popular city centre locations will be safeguarded.”
This post has originally been featured in Property Wire.