Property activity continues to rise in October

Demand from property buyers showed no signs of slowing in October, pushing up house prices across all parts of the UK, according to the latest RICS UK Residential survey.

Nearly half of all respondents (46%) saw an increase in demand from new buyers in October, the monthly sentiment survey of Chartered Surveyors who operate in the residential sales and lettings markets found, while 68% said they’d seen prices increase. It is the fifth consecutive month that demand has been positive, following a slump during the first lockdown.

Four in 10 contributors (41%) said they’d seen an increase in the number of agreed sales in October, down from 54% in September. East Anglia recorded the greatest number of contributors reporting an increase in the number of agreed sales.

Demand has been boosted by Stamp Duty holiday on property purchases up to £500,000, and the fact that house moves have been allowed to continue during the second lockdown. Moves could only go ahead during the first lockdown if they were essential.

House prices across all parts of the UK have risen due to this strong demand, with Wales, the West Midlands, the South West and Yorkshire and the Humber all seeing exceptionally strong growth.

In the lettings market, tenant demand picked up in the three months to October, RICS said, marking the second straight quarterly rise.

Subdued longer term outlook

Although short-term sales expectations remain positive despite the second lockdown, the longer-term outlook remains uncertain, with respondents expecting a much flatter trend in house prices to emerge.

Simon Rubinsohn, chief economist at RICs, said: “The housing market remains very busy and despite the second national lockdown, the sense is that this will persist over the coming months and into the New Year. However, there is understandably more caution about activity looking beyond the first quarter of 2021. Aside from the withdrawal of government incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come.”

Expectations for rental growth over the near term remain positive across most parts of the country, according to RICS, with the exception of London, where more than half of respondents said they expect rents to decline over the next three months.