Robust demand and limited stock to support prices

The housing market cooled in July as the stamp duty holiday began to unwind. Newly agreed sales and buyer enquiries dropped back, annual house price growth began to stabilise, and transactions fell. However, the RICS balances compare activity to the previous month when transactions hit a record high so while activity may have softened, it has by no means collapsed. Web searches for the property portals Rightmove & Zoopla remain well above pre-virus levels, providing further evidence that the stamp duty holiday was just one of many reasons for strong home purchase demand over the past year. Meanwhile, the amount of second-hand stock on the market is very limited, so competition between buyers is set to remain strong. As a result, we continue to expect house price inflation to cool rather than collapse when the stamp duty holiday ends altogether in October.