House sales edged up slightly during January as an increased number of first-time buyers looked to beat the stamp duty holiday, which expires in March, according to the latest RICS UK Housing Market survey published today( February 14th 2012) by the Royal Institution of Chartered Surveyors.
Twelve per cent more surveyors across the UK reported rises rather than falls in newly agreed sales since the beginning of the year. From 24 March, first-time buyers will no longer be exempt from stamp duty on properties under £250,000 and some surveyors note this has produced an increase in activity at the lower end of the market.
In light of this, respondents were optimistic about prospects in the near term, as a net balance of 19% of surveyors predicted transaction levels to pick up over the coming three months. This represents the strongest reading since May 2010.
In spite of this relative optimism, prices across much of the country continued to drop, albeit moderately, with 16% more surveyors reporting price falls rather than rises. Across the UK, London once again saw the strongest reading in terms of prices, while the West Midlands and Wales saw the biggest falls, with surveyors reporting net balance readings of -54 and -41 respectively.
Supply remained relatively steady during January, with 7% more surveyors reporting increases rather than decreases in new homes coming onto the market. While slightly down on December's figure of +11%, this is the fourth consecutive positive reading for new instructions across the country.
Alongside this, overall new buyer demand dipped slightly in the first month of the year, demonstrating that the recent lift in activity has been driven by one-off factors, with 7% more respondents reporting falls rather than rises in new buyer enquiries. Despite a relative upturn in interest from some first-time buyers prior to the end of the stamp duty holiday, surveyors report that lack of affordable mortgage finance continues to hold back the market.
Looking ahead, while a cautious optimism surrounds future transaction levels, the same cannot be said for future prices. A net balance of 15% more surveyors expect prices to continue falling over the coming three months.
"With first-time buyers no longer exempt from stamp duty as of the end of March, it seems that some are looking to purchase homes before the deadline and, as a result, surveyors are relatively optimistic for the coming months. However, many problems with the market still exist and the lack of affordable mortgage finance is still preventing many from getting onto the property ladder. Prices are still falling across most parts of the country, but expectations for future prices have become less pessimistic." said Michael Newey, RICS housing spokesperson.
