RICS survey: Stamp duty cut for first time buyers ‘having little effect’ in East Midlands

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House buyer interest was down again in the East Midlands in December, according to the latest RICS UK Residential Market Survey.

Results suggested that the abolition of Stamp Duty for first time buyers on properties under 500,000 had little immediate effect.

Survey figures are seasonally adjusted, and new buyer enquiries continued to fall for the third consecutive month as 53% 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 as whole said they hadn’t.

Moving to the resulting sales, agreed transactions also fell this month across the region with 20% more respondents reporting a decline in volumes over the month.

The outlook over the coming three months is also less than optimistic with a net balance of 12% of respondents expecting sales to fall. However, this near term hesitancy anticipated to change over the next twelve months with activity anticipated to pick-up across the region.

Looking at supply for the region, new instructions also continued to decline, for the second consecutive month.

Comments from respondents continue to emphasise the adverse impact this is having on the market and stock levels continue to linger around all-time lows.

Once again, the underlying issue of stock shortages supports price rises across the region. In December, 30% more chartered surveyors reported price rises across the East Midlands.

In the lettings market, tenant demand continued to fall during December (on a non-seasonally adjusted basis) with new landlord instructions having also declined.

Somewhat similar to the sales market, the lack of stock is driving rental growth expectations for the three months ahead (net balance moving to +17% in December from +6% in November).

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.

“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.”