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End of tax holiday lures FTBs to housing market

The prospect of the Stamp Duty holiday ending on March 24 prompted first-time buyers to test the market last month, says the Royal Institution of Chartered Surveyors.

In its March UK Housing Market Survey, which polls surveyors about activity, it found that 9% more surveyors reported an increase in first-time buyers, the highest in almost two years.

There was more good news with the flow of properties coming on to the market remaining relatively stable with a net balance of +2% and more respondents reporting rises in new instructions.

There was also a large increase in activity in the North-West, with a net balance of +36% surveyors seeing an increase in buyer interest, which resulted in an upward shift in price expectations in the region.

Meanwhile, a net balance of 20% more surveyors expected sales to increase over the next three months.

But prices continued to edge downwards across all areas of the country except London, albeit at a slower pace than in recent months.

Some 10% more surveyors reported falls rather than rises in prices, representing the least negative reading since June 2010.

Predictions for future prices across the UK remained flat for the second consecutive month, suggesting that growing demand may be contributing to a more optimistic outlook.

Simon Rubinsohn, chief economist at RICS, says: “There has been a gentle increase in activity across the market in the early part of the year but what remains to be seen is whether this can continue, given changes announced in the Budget and ongoing problems affecting the economy.”

Paul Diggle, property economist at Capital Economics, is also suspicious about the positive March numbers and says several temporary factors may be acting to give a more robust impression of housing market activity than is the case.

He says: “Once the effect of the end of the Stamp Duty holiday and the better-than-normal weather fall away, buyer enquiries and agreed sales may weaken again.”

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