UK homebuyer demand rebounds to a six-month high, index shows
Improving demand indicates the property market is steadying from the impact of the increase to the stamp-duty tax
[LONDON] A closely watched gauge of demand from potential British homeowners climbed to its highest level in six months, a signal that the real estate market is starting to stabilising from a tax-increase induced slowdown that’s weighed on house prices.
The Royal Institution of Chartered Surveyors (RICS) said its index tracking new buyer inquiries rose to +3 in June, indicating the number of estate agents seeing higher demand outnumbered those reporting a drop, figures released on Thursday (Jul 10) showed. It was the first positive reading since December and a sharp jump from -22 in May.
Improving demand indicates the property market is steadying from the impact of the increase to the stamp-duty tax, which fuelled a spurt of buying before it kicked in and a steep slowdown afterwards. Even so, the pace of sales remains relatively subdued, in part due to a slowing economy and anxiety about the outlook.
“The earlier distortion caused by transactions being brought forward ahead of the Stamp Duty changes now appears to have largely dissipated, allowing underlying trends to re-emerge,” said Tarrant Parsons, head of market research and analysis at RICS.
The RICS house-price indicator was largely unchanged at -7 in June, bucking analyst expectations that it would continue to decline. Other recent reports have sent relatively mixed signals, with Nationwide reporting a drop in prices while Halifax indicated they were little changed.
But property agents forecast aggregate prices will continue to trend downwards in the near-term before improving over the next year, according to RICS.
“Encouragingly, near-term sales expectations have begun to edge higher, pointing to a modest shift in sentiment,” Parsons said. “That said, confidence in the market remains somewhat delicate.” BLOOMBERG
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