South East: Stamp duty reform set to bolster house sales, says RICS

House price growth in the South East dipped for the seventh consecutive month in November, but stamp duty reforms see surveyors forecasting a sales boost of between 2-5%, according to the latest RICS Residential Market Survey.

Despite a net balance of 22% more chartered surveyors reporting a decline in new buyer enquiries in the South East and a fall in supply to the region’s market, a snap poll across the UK saw surveyors expecting more house sales in response to the stamp duty reforms.

As speculation continues over how much the new changes will encourage existing property owners to put properties on the market, the reforms come in a month that saw house price growth in the South East fall to its slowest pace since September 2012 (a 1% net balance) and newly-agreed sales decline for the fifth consecutive month.

It was also clear from RICS member comments that uncertainty surrounding the outcome of the forthcoming general election is providing potential purchasers with a reason to sit on their hands.

Across the rest of the UK, price growth was strongest in Scotland and the South West (both a net balance of 37%) and weakest in the North of England and London.

Simon Rubinsohn, RICS chief economist, said: “The stamp duty reform could reverse the softer trend in buyer enquiries that has been visible in recent months but a critical issue in terms of how it plays out with prices is whether it also encourages more vendors to consider putting their properties back onto the market. The expectation from members that transactions could increase by up to 5% over the next year on the back of this measure suggests that there is a belief that supply will indeed respond to the tax change.  This is all the more important given that the latest RICS data suggests that the average level of inventory on surveyors’ books is close to historic lows.”

Jeremy Blackburn, head of policy at RICS, said: “It’s no surprise that surveyors are expecting an uplift in the market in response to the long-overdue reforms to the stamp duty tax system which the chancellor himself called ‘the most damaging tax of all’.

"Removing the ‘dead zones’ will reduce the distortion in the market and ensure that those at the top end of the market will now contribute fairly, while those at the bottom will be given a fairer chance to get on the ladder.”