The housing market is set for a slow start in the new year due to a shortage of homes for sale, according to a survey by the Royal Institute of Chartered Surveyors (RICS). Although property transactions may increase at the beginning of 2017 after slowing since the spring, the survey suggests that any acceleration is likely to be modest at best.
The announcement by RICS follows a prediction by the Halifax that price growth in the housing market is set to slow over the first few months of 2017. Whilst November saw property prices increase and a rise in enquiries from potential new buyers, the relative number of new homes going on the market has been low. As many have subsequently been bought quickly, this has resulted in a lack of choice for buyers. The survey has made it clear that the dominant feature of the current market is the shortage in supply of properties.
More than one in three surveyors told RICS that properties in their area were overpriced, with almost two in three (60%) of surveyors in the South East describing prices in the past month as ‘above fair value’. Looking to the future, 14% of surveyors across the UK expected an increase in house prices over the next three months, that figure rising to 40% when considering the movement of house prices over the coming year.
The changes to stamp duty have also had a significant impact on the market, with a slump in the sale of properties priced over £1 million. Introduced in April 2016 by the former Chancellor George Osborne, the additional stamp duty at a rate of 3% hit both landlords and owners of second homes in an attempt to assist first time buyers. However, the London Central Portfolio has released figures which suggest that the changes have resulted in losses by the Treasury of almost half a billion pounds.
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