RICS: Panic buyers clear the shelves at the estate agents again

Sarah Coles, personal finance analyst at Hargreaves Lansdown, comments on the RICS Residential Market Survey for June, which shows panic buyers clear the shelves at the estate agents again.

Sarah Coles comments:

“Panic buyers have been clearing the shelves at the estate agents again. The number of new properties for sale fell for the third month running, so although buyers have come to the market more slowly, there are still plenty of them to ensure any promising new property is snapped up overnight. It means buyers are getting sucked into a race to make an offer, then a bidding war, and even after they secure a property, they run a bigger risk of being gazumped.

“It’s a vicious circle, because potential sellers can’t see anything they want to buy at the moment, so they don’t list. It means anyone who might have wanted to buy their home doesn’t have anything to buy so they don’t list either, and so on.

“As a result, prices continue to rise, and the RICS survey respondents expect more increases through the rest of the year. A shortage of properties, and record low mortgage rates are likely to underpin the market for a while to come.

“However, the pace of sales seems likely to slow as the stamp duty holiday comes to an end in September. Agents are erring on the side of caution, expecting a flat market in the next three months and fewer sales in the next 12 months. Whether this brings about a slowing of price rises, a flattening, or something more dramatic, depends on what happens in the broader economy. 

“A very strong economic recovery raises the possibility of inflation and potential interest rate rises, which could hit the property market. On the flip side, new variants or a rise in hospitalisations that forces a return to lockdowns and closure of businesses, could damage the recovery and force job losses, which would also hit property. The property market flourishes in a goldilocks economy, and there are no guarantees of this as we go further through the year.

“This level of uncertainty means potential buyers need to consider all eventualities. If they’re buying an affordable property that they plan to stay in for the foreseeable future, and can cope with potential rate rises, then they may be perfectly comfortable. However, if they’ve over-stretched themselves and over-paid, this could be a good time to reconsider their position.”

Kindly shared by Hargreaves Lansdown

Main photo courtesy of Pixabay