The UK housing market continued to display a lack of momentum in December, with buyer interest edging lower. Changes to Stamp Duty for first time buyers is having little immediate effect, according to the December 2017 RICS UK Residential Market Survey.

86% of respondents report no response yet from first time buyers following changes to Stamp Duty.

Buyer interest edges lower as sales and new instructions continue to decline.

However, the twelve-month outlook for prices and sales is more upbeat.

In December, activity in the UK housing market continued to drop. After new buyer enquiries came close to stabilising in November, 15% more respondents noted a decline in demand (as opposed to an increase) in the month of December.

Furthermore, when contributors were asked whether they have seen an increase in first time buyer enquiries following changes to Stamp Duty in the Autumn Budget, an overwhelming majority of 86% across the UK said they hadn’t.

Growing house prices

Looking at prices, the headline balance moved to +8% in December following a reading of zero in November. As such, this measure is now consistent with a marginal increase in prices nationally (on the most closely followed indices) over the coming months. The three month price expectations series however remains negative at the national level, highlighting a lack of conviction surrounding the near term outlook.

Is there enough property to rent?

In the lettings market, tenant demand continued to fall during December (on a non-seasonally adjusted basis) albeit the pace of decline eased somewhat from the previous report. Meanwhile new landlord instructions declined at a slightly faster rate. As a result, rental growth expectations were modestly positive for the three months ahead (net balance moving to +9% from +4%).

Simon Rubinsohn, RICS Chief Economist commented, “The initial feedback from the market doesn’t suggest that the change in the Stamp Duty regime announced in the budget is going to have a material impact on activity. Indeed, the risk was always that a good portion of the benefit would be capitalised in the price, therefore limiting the benefit for the first-time buyer.

Meanwhile, the latest RICS data continues to highlight the importance of disaggregating the headlines numbers when talking about the market. Challenges over affordability may have grown across the UK but they are clearly having a bigger impact in some parts of the country than others. This is clearly evident in the sales expectations figures which still remain in positive territory in more than half of the areas surveyed in the report.

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