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11 Feb 2021 | 07:55

UK housing market cools as lockdown restrictions hit home

(Sharecast News) - The UK housing market slowed in January, a closely-watched survey found on Thursday, with the third national lockdown weighing on demand despite estate agents being allowed to remain open. According to the January 2021 RICS UK Residential Survey, a headline net balance of -28% of respondents reported a decline in new buyer enquiries over the month, bringing to an end seven consecutive months of positive readings. The balance of surveyors reporting that house prices had risen also fell, to 50% from 63% in December. That was below consensus, with most analysts looking for a reading of around 60%.

Surveyors found that although estate agents remained open, the pandemic was deterring both would-be vendors and buyers. Further compounding weakened demand is the forthcoming end to the stamp duty holiday, on March 31.

A national net balance of -18% reported a fall in agreed sales, a sharp contraction on December's positive reading of 15%. The number of fresh listings coming to the market also eased, with a net balance of -38% noting a fall.

Looking ahead, near-term sales expectations returned a net balance of -29%, only marginally weaker than December's -23%, while the 12-month outlook was largely flat, at -4% compared to -6% a month previously.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Evidence is continuing to accumulate that the housing market is cooling, now that insufficient time remains for prospective buyers to complete transactions before the threshold for stamp duty returns to £125,000.

"Accordingly, we continue to expect house prices to fall by about 2% over the course of 2021, provided government policies do not change."

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: "After seven months of frenetic activity, the number of new properties on the market has fallen, the number of new buyers registering is down, and there has been a drop in agreed sales.

"Lockdown has locked up an enormous number of sales, as fewer people are keen to wander round anyone else's home, or let strangers in. Solicitors, surveyors and council workers are also working from home, which means the already sluggish sales process has slowed to a snail's pace."
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