U.K. real estate professionals are expecting home prices to continue growing across the country, powered by competing buyers fighting for limited inventory, according to a survey Thursday from the Royal Institute of Chartered Surveyors (RICS).
While the number of new listings hitting the market in May deteriorated, buyer inquiries rose at a solid rate, and the gulf between supply and demand now stands at its widest point since November 2013, according to the survey results.
At the start of the year, supply was curbed “due to uncertainty over new Covid-19 variants, the constraints of home-schooling and an expectation that the original March stamp duty deadline would be missed,” Tom Bill, head of U.K. residential research at Knight Frank, commented in response to the survey’s findings. “The situation was exacerbated as sellers were unable to find purchase options of their own.”
“If you add in a stamp duty holiday and the fact pent-up demand has been building for years against the uncertain backdrop of Brexit, the result is a burst of house price inflation,” he added.
The stamp duty holiday, introduced last July amid the height of the pandemic, eliminated the transfer tax on the first £500,000 (US$708,417) of a home sale across England and Northern Ireland for a maximum saving of £15,000.
A majority of respondents to the survey expect home prices to continue rising in both the short term—over the next three months—and over the next 12 months, according to RICS.
Even with the stamp duty holiday starting to taper off at the end of June, before gradually phasing out by the end of September, “the principal drivers supporting demand will remain in place,” Simon Rubinsohn, RICS chief economist, said in the report.
“More challenging is the question of supply, a theme coming back strongly from respondents to the survey,” he added.
Respondents to the survey reported in May that the number of market appraisals being undertaken is up from the same time last year, which could eventually translate into an increase in new listings on the market.