Housing market activity continued to rise in August as buyers looked to cash in on the stamp duty holiday, according to the latest RICS UK Residential Survey.
A net balance of 63% of respondents reported an increase in buyer interest over the month but they warned that the longer-term view remains more cautious.
As buyer enquiries continued to rise, new instructions also saw a jump, with a headline net balance of +46% of survey participants noting an increase in vendors listing property to sell.
Industry reacts to August rise in house prices
Looking ahead, near term sales expectations remain modestly positive, but 12-month sales projections are still in negative territory, with the net balance coming in at -17% (down from -10% last time).
Simon Rubinsohn, RICS chief economist, said: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months.
“More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.”
The pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents anticipate demand increasing for homes with gardens over the next two years.
Some 79% predict rising demand for those properties near green space, while a net balance of +68% foresee a rise in the desirability of properties with more private/less communal outside space.
Rubinsohn said: “The results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic.
“Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.”
Tomer Aboody, director of property lender MT Finance, added: “COVID has definitely impacted buyers’ demands and priorities, due to future working conditions and being at home more, needing space for a home office and a garden or more room outdoors.
“This has intensified the search for assets outside of London with good travel connections into the city, and with the stamp duty holiday also playing a part, more people are able to buy homes which are cheaper than in the capital.
“What buyers want is the small village feel, where shops, cafes, schools and parks are available on their doorstep as they look to work more from home, whether they live in a city or not. This will push up prices in London’s many ‘villages’.
“Affordability can be an issue and this is where a more flexible approach needs to be taken by mortgage lenders, looking at applications on a case-by-case basis and taking into consideration factors such as deposit size, affordability and asset value.
“If you combine these factors, many more people will be able to buy.”
In the lettings market, tenant demand continued to rise sharply, while landlord instructions were broadly flat following a modest pick-up in July (non-seasonally adjusted monthly series).
Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of +31% of contributors now anticipating an increase (+22% in July).