UK housing market activity jumps after tax incentive extended

London

THE United Kingdom housing market picked up last month as inquiries, sales and new listings all climbed following an extension of a temporary tax break.

New buyer inquiries jumped the most since September, according to the Royal Institution of Chartered Surveyors (RICS).

That's adding to demand that continues to outstrip supply, despite an increase in sellers bringing new properties to the market.

The outlook for sales was the most upbeat since before the pandemic, and prices rose across all regions of the country.

Britain's property market shook off the worst recession in three centuries, buoyed by a tax holiday on purchases that Chancellor of the Exchequer Rishi Sunak extended until September. That, along more flexible work-from-home policies, spurred buyers weary from lockdowns to push ahead with finding a new place to live.

"The results from the latest RICS survey show that the decision of the chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market with all the key activity indicators rebounding in March," said Simon Rubinsohn, RICS chief economist.

"Demand is outstripping supply," he added. "Prices continue to move upwards. More worryingly, this is also being reflected in the price expectations data both at the 12-months horizon and beyond."

The imbalance in demand also has spread to the lettings market, where the number of tenants looking for properties rose even as listings by landlords declined.

Respondents said rents will likely increase almost 3 per cent in the next year, except in London where the market has stagnated.

Mr Rubinsohn said that a worsening imbalance between supply and demand had also raised the pressure on house prices, with a net 60 per cent of survey respondents expecting prices to rise over the next 12 months.

RICS also said there were signs that tenant demand in the rental market was building a "head of steam" and surveyors expected rents to rise over the coming year across the country, apart from in London.

Mr Sunak introduced the stamp duty tax cut last year as part of emergency measures to help the economy cope with the shock of the coronavirus pandemic.

Demand for bigger homes after the experience of lockdown has also driven a surge in activity in Britain's housing market since last spring. BLOOMBERG, REUTERS