There was a spike in activity in the housing market in January as a result of the housing market due to the 3% stamp duty surcharge due to come into effect in April according to the RICS UK Residential Market Survey.
January was only the third month in the past year and a half that saw a pick-up in supply. However, this was not enough to offset the surge of demand from buy-to-let investors with as many as 74% of respondents saying they expect there to be an increase in buy-to-let purchases prior to the stamp duty changes. This has been pushing house prices even higher.
New buyer enquiries rose for the tenth month in succession in January, with the pace of growth in enquiries accelerating for a second consecutive report.Agreed sales over the month rose at the fastest pace since April 2014.
House prices are projected rise further over the next twelve months, with 72% more contributors expecting prices to increase rather than fall.
RICS chief economist, Simon Rubinsohn said: “The rise in new instructions in January, although modest, is very welcome. However with buy to let investors rushing to get into the market ahead of the stamp duty hike, the near term pressure on prices is if anything intensifying despite a higher level of supply.
“How the tax changes planned for the buy to let sector over the next few years play out remains to be seen but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite. Against this backdrop, it is perhaps not surprising that the key RICS indicators points to further rent (as well as house price) increases.”
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