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Coronavirus: UK housing market sees second month of growth as new buyers flood market

Edmund Heaphy
·Finance and news reporter
·2-min read
A row of terraced residential houses in north London. Chancellor Rishi Sunak has confirmed temporary plans to abolish stamp duty on properties up to 500,000 GBP in England and Northern Ireland as part of a package to dull the economic impact of the coronavirus. Picture date: Saturday July 11, 2020.
House prices rose in all regions in England and Wales except for London, where more respondents cited a decline. Photo: PA

Demand for homes in the UK rebounded for the second consecutive month in July as the government’s stamp duty holiday prompted new buyers to flood the market, according to a closely watched survey.

A survey by the Royal Institute of Chartered Surveyors (RICS) showed that surveyors expect the drawn-out economic recovery and rising unemployment to dent the positive momentum in the housing market, however.

The survey’s headline net balance came in at +75% in July, indicating that a large proportion of respondents saw an increase in demand during the month — the second consecutive report in which it has “firmly” rebounded.

July was also the first month since March in which respondents reported a growth in average prices, which fell in the wake of widespread government coronavirus restrictions.

Prices rose in all regions in England and Wales except for London, where more respondents cited a decline.

The number of new instructions being listed onto the sales market also rose sharply, RICS said on Thursday.

While respondents expected continued growth in demand over the next three months, a majority see it tailing off over the next 12 months, citing concerns about UK economic prospects and the end of the government’s wage-subsidy scheme in October.

“The strong impetus provided to the housing market is evident both in the results of the RICS survey and many of the anecdotal comments from respondents,” said Simon Rubinsohn, the chief economist of RICS.

“However, it is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll,” he said.

While more respondents expected house prices to rise over the next 12 months, the reading was only “consistent with a flat to marginally positive outlook for house prices,” RICS said.

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RICS said that anecdotal evidence suggested that the government’s stamp duty holiday was playing “a significant role in lifting demand.”

Chancellor Rishi Sunak said in his July summer statement that homebuyers will not pay the tax on home purchases under £500,000 ($655,000) in England and Northern Ireland.

It will apply from 8 July to 31 March next year. While this is up from £125,000, there were already higher thresholds for first-time buyers.