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UK surveyors report surge in activity as investors try to beat tax rise
[LONDON] British property valuers reported a surge of activity on Thursday as property investors tried to beat an increase in transaction taxes on rental investments coming into force in April.
Demand for housing remains buoyant, lifted by tight supply, record employment and cheap mortgage rates, even as the global economic outlook darkens - something which prompted the Confederation of British Industry to follow the Bank of England and downgrade its economic growth forecasts on Thursday.
The Royal Institution of Chartered Surveyors said there had been the biggest increase in sales since April 2014 last month, and that 74 per cent of participants in its monthly poll expected buy-to-let investors boost demand before April's tax rise.
RICS's headline price balance held at December's downwardly revised level of +49, undershooting economists' forecasts in a Reuters poll for it to rise to +52 but close to recent highs.
The body also reported an increase in the number of homes being offered for sale for only the third time in 18 months, and by the largest margin since August 2013, though this was still too little to keep up with demand. "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," RICS's chief economist, Simon Rubinsohn, said.
Finance minister George Osborne announced in November that an extra 3 per cent transaction tax would apply to properties purchased to rent from April, as part of government efforts to boost home ownership.
Rubinsohn said this and other tax rises for landlords could encourage some to gradually reduce their holdings over the next few years. Against a backdrop of limited housing supply, RICS members forecast this would push up rents.
The overwhelming majority of RICS members also expect house prices to rise over the next 12 months.
British house prices rose by 7.7 per cent in the 12 months to November, according to official data.
In a separate report, the CBI forecast a 6.4 per cent house price rise for 2016, slowing to 2.8 per cent next year.
The CBI also cut its economic growth forecasts to 2.3 per cent for 2016 and 2.1 per cent for 2017, down from 2.6 per cent and 2.4 per cent in November.
The Bank of England made a similar growth donwgrade last week, and both organisations blamed weaker global growth.
Britain's economy grew 2.2 per cent in 2015, among the fastest of major advanced economies, but significantly slower than forecast at the start of the year. A slump in December industrial output data released on Wednesday raised the risk this could be revised lower.
The CBI said there was no evidence that increased speculation that Britain would hold a planned referendum on European Union membership in June was causing businesses to defer investment plans.