UK housing market cools as stamp duty effect fades

New buyer enquiries fell for the first time in four months and agreed sales dropped, according to the Royal Institution of Chartered Surveyors' monthly survey. Enquiries showed a net balance of -9% among RICS members, down from +10% in June and agreed sales came in at -21%.

House prices rose as lack of supply pushed up valuations. The survey showed +78% of respondents reported rising prices, a slight dip from +82%. The outlook for prices strengthened with +66% expecting an increased over the next 12 months, up from +56% in June.

The UK housing market has experience frenzied activity in the past year after Chancellor Rishi Sunak announced and then extended a stamp duty holiday for the first £500,000 of a property purchase. Much of the benefit stopped at the end of June and the concession will end entirely at the start of October.

Activity has also been driven by households moving to bigger properties in the suburbs and more remote areas, attracted by the prospect of working from home after the pandemic. This trend resulted in London having relatively weak price growth compared with areas such as the North of England, Wales and East Anglia in July.

Simon Rubinsohn, RICS's Chief Economist, said: “Although the tapering in stamp duty is beginning to have some impact on RICS activity indicators, the overall tone to the market remains firm with the metrics capturing price expectations showing few signs of wavering.

“A strong message from survey respondents is that buyers are continuing to place a premium on space with the prospect of a hybrid model of work being adopted by many organisations providing the opportunity for greater flexibility around location."

Sales volumes fell most sharply in Yorkshire and the Humber, the East Midlands and East Anglia. In the rental market, new instructions from landlords fell, leading to expected rent rises over the next three months.