Estate agents and surveyors are growing increasingly concerned about the risk of “a boom followed by a bust” in the property market, warning that a surge in activity in July is likely to evaporate if the UK economic picture darkens later this year.
The worries surfaced in a closely watched survey by the Royal Institution of Chartered Surveyors, in which respondents said the levels of agreed sales, new instructions and buyer inquiries were up sharply across the UK in July, fuelled by the end of lockdown and the stamp duty holiday.
The balance survey suggests the rebound in activity seen in June gathered further momentum in July, with a net balance of 56 per cent of respondents seeing a rise in agreed sales over the month. A net balance of 75 per cent of agents and surveyors said they had seen an increase in buyers over the month.
Similarly, new instructions rose sharply, with a net balance of 59 per cent of respondents reporting a rise in July, up from a reading of 41 per cent in June.
The Rics said there was evidence that the nine-month stamp duty holiday, introduced on July 8, was playing “a significant role” in boosting demand. However, many agents in its survey did not expect the surge to outlast the withdrawal of wider government support measures later in the year.
“Significantly, some contributors are now even referencing the possibility of a boom followed by a bust,” said Simon Rubinsohn, Rics chief economist.
The survey reinforces the picture of a July resurgence in the property market painted by the latest Nationwide and Halifax house price indices. The former showed prices rebounding from a 1.6 per cent fall in June to a 1.7 per cent gain in July; the latter a jump of 1.6 per cent in the month.
The property market had already been undergoing a strong recovery after lockdown restrictions were eased in May, agents and surveyors said, but the stamp duty holiday, which hands buyers a maximum saving of £15,000 on a purchase, had galvanised buyers and sellers.
Chris Charlton, a chartered surveyor for Savills in Nottingham, said July was a “quite amazing” month, with more homes going under offer than in any month in 2019. “Let’s hope it can last,” he said in comments included in the survey.
The Rics also noted a trend for buyers to consider suburban or rural properties, or those that offered a better quality of life. “There is a greater interest in properties that offer some features that help better manage future lockdowns, whether it is access to green spaces, gardens or balconies,” Mr Rubinsohn said.
Colin Bernhardt, a surveyor at Bernhardt Associates in Bognor Regis, said: “Since [the] stamp duty holiday the market has really taken off. The virus has also made people make decisions about trading up and down. We are a coastal area and London buyers are buying second homes.”
But others were concerned over the level of exuberance in the market. Michael David Jones, a surveyor in Bromyard, Herefordshire, said the residential market after lockdown was “showing significant indications of overheating locally rather like in the summer of 1988”.
John Halman, an agent at Gascoigne Halman in Wilmslow, Cheshire, said the market was “very busy . . . just like 2007, and we all know what happened then”.