Demand for buying a new home is ‘weakest since April 2020’ say Rics estate agents, as enquiries dropped 40% in August alone
- Estate agents report the weakest demand for home buying since April 2020
- New listings fell by 15% month-on-month down on the 6% drop seen in July
- Average estate agent branch now has just 34 properties on its books
- Half of respondents said demand for rental properties rose in August
Home buyer enquiries fell nearly 40 per cent in August according to Royal Institution of Chartered Surveyors estate agents, coming after a 26 per cent drop seen in July.
It is the weakest buyer demand reported since April 2020 at the start of the Coronavirus pandemic, and comes amid fears of a downtown in the property market after years of sustained price growth.
The decline is widespread according to the Rics residential market survey, with surveyors in most areas of the UK reporting a downturn in buyer enquiries.
Demand down: Home buyer enquiries have declined to levels not seen since the beginning of the pandemic, according to Rics estate agents
London is one of the exceptions with demand for properties in the capital remaining steady.
At the same time the number of homeowners listing their properties for sale has also dropped, with agents reporting a 15 per cent fall in new listings nationally in August. Listings were down 6 per cent in July.
As a result, the average number of homes on estate agents’ books sunk to a fresh all-time low of just 34 homes over the latest survey period.
Property sales have now fallen for five consecutive months with the figure down 22 per cent in August, implying the downward trend is ‘gathering pace’, Rics said.
Over the next twelve months, just under half (45 per cent) of respondents foresee sales slipping, marking the poorest return for this series since its formation in 2012.
Cooling demand: New buyer enquiries plummeted 40% in August as agents warned of the start of a slowdown in the property market
Supply shortage: In August, the average number of homes on the books of estate agent branches fell to an all time low of just 34
Yet despite the weakening conditions 53 per cent of agents said house prices continued to rise in August. However, agents predicted that prices would rise by just 0.3 per cent over the next 12 months.
Respondents across Northern Ireland, the North West, London and East Anglia in particular all continue to highlight relatively firm house price growth in the short term.
There is some “sanity” in the market place and not every house is selling above guide
James Watts of Robert Watts Estate Agents in Bradford said: ‘The market in general appears to have cooled, although August is an unreliable month to rely on due to holidays.
‘There are, however, more houses that have not sold after four weeks than in the past two years.’
Dorset-based Mark Lewis at Symonds & Sampson added: ‘Some properties continue to attract competitive interest, but there is some “sanity” in the market place and not every house is selling above guide.’
Demand for homes still strong among tenants
In the lettings market, the disparity between supply and demand continues. Half (50 per cent) of survey respondents said they saw an increase in tenant demand, up from 43 per cent in July, while new landlord instructions fell 13 per cent.
Rics said that survey respondents continued to blame changes to the tax and regulatory environment for landlords as reasons for the decline in supply.
Between 2017 and 2020, the Government phased out tax relief on buy-to-let mortgages.
Previously, landlords were able to offset all of their mortgage interest against their tax bills.
This meant a landlord with mortgage interest payments of £400 a month on a property rented out for £1,000 a month would only pay tax on £600 of that income.
But this system was replaced and they now only get a 20 per cent tax credit — which is a blow to higher earners who pay 40 per cent income tax.
Coupled with increased mortgage rates as result of consecutive base rate rises from the Bank of England, landlords’ profits have been hit.
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