RICS Residential Market Survey (Mar.) - Capital Economics
UK Housing

RICS Residential Market Survey (Mar.)

UK Housing Market Data Response
Written by Andrew Wishart

The extension of the stamp duty holiday has given the ongoing housing market boom renewed momentum and could push house price inflation up from 6% in March well into double figures by the summer.

Housing market boom gains renewed momentum

  • The extension of the stamp duty holiday has given the ongoing housing market boom renewed momentum and could push house price inflation up from 6% in March well into double figures by the summer.
  • The rise in the number of sales per surveyor from 19.2 in February to 20.6 in March suggests that last month was the best for sales since September 2014. The hard data had already hit a post-financial-crisis high, with HMRC registering 147,000 sales in February (+49% y/y). The RICS survey suggests that transactions will remain very high in the coming months.
  • With stock limited, strong demand led to prices being bid up further. The past prices balance rose to a three-month high of +59. (See Table 1.) And the sales to unsold stock ratio, a good indicator of market tightness, hit its highest level since 2004 pointing to the greatest excess of demand over supply since then. That is consistent with a renewed acceleration in annual house price growth, perhaps from 5.7% on the Nationwide index in March to over 10% come the summer. (See Chart 1.)
  • And there was no sign in the data that market dynamics will change soon. New seller instructions did pick up from -28% to +22%, but was outstripped by an increase in new buyer enquiries from 0 to +42%.
  • Meanwhile in the rental market, tenant demand and rent expectations strengthened nationally. But London was an outlier as the balances for demand and rent expectations there fell back further into negative territory, putting paid to some tentative signs of recovery in February.
  • Overall high sales, strong demand, and limited stock suggests that house price inflation could accelerate into double figures in the coming months. The reimposition of stamp duty and the end of the furlough scheme will eventually cool the market, but until then house prices will rise further.

Chart 1: Ratio of Stock to Sales & House Prices

Sources: RICS, Nationwide, Capital Economics

Table 1: RICS Residential Market Survey – Key Figures

2020

2021

Net balances seasonally adjusted

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Past prices

6

-17

-30

-9

16

44

61

66

62

62

50

54

59

New buyer enquiries

-73

-92

0

58

73

56

45

38

23

13

-29

0

42

New sales instructions

-68

-96

-15

41

55

42

34

26

13

1

-42

-28

22

Sales per surveyor (past 3m)

13.4

7.2

7.3

10.1

12.5

14.1

15.0

18.1

19.1

18.9

17.9

19.2

20.6

Unsold stocks per surveyor

40

35

35

39

41

42

42

43

45

46

43

43

42

Tenant demand

-2

-48

-12

24

43

49

33

21

3

15

9

26

36

Landlord instructions

-32

-71

-43

-4

12

-1

-1

-8

-19

-12

-17

-28

-25

Rent expectations

-24

-39

-11

11

22

31

19

11

8

20

16

37

47

Source: RICS


Andrew Wishart, Property Economist, +44 (0)7427 682411, andrew.wishart@capitaleconomics.com