Warning bell rings – market boom could lead to bust, says RICS
The latest market snapshot by the Royal Institution of Chartered Surveyors (RICS) warns the current market boom may not continue as government support measures are phased out.
The RICS report is seen as influential by many in the industry and is a sentiment survey measuring the balance of views of responding surveyors.
Today’s RICS report shows a net balance of 75 per cent of respondents have seen the market get busier over the past month; similarly, new instructions listed on the sales market rose sharply, evidenced by a net balance of 59 per cent of respondents reporting a rise.
Alongside this, a net balance of 57 per cent of respondents nationally saw a rise in agreed sales in July – another sign of a strong pick-up in transactions, with improvements across the UK.
However, RICS warns that its survey’s 12-month sales projections remain negative.
The institution’s announcement this morning says:
“Indeed, a net balance of minus 10 per cent of respondents foresee sales tailing off over the year ahead, with concerns about the prospects for the UK economy and the impact this will have on employment as the furlough scheme expires in October.”
Turning to house prices, these moved out of negative territory for the first time since March.
Across the UK in aggregate, a net balance of 12 per cent of respondents reported an increase in house prices during July, and prices rose almost everywhere in the UK aside from London.
Simon Rubinsohn, RICS chief economist, cautions:
“The strong impetus provided to the housing market is evident both in the results of the RICS survey and many of the anecdotal comments from respondents. However, it is interesting that there remains rather more caution about the medium-term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll.
“Significantly, some contributors are now even referencing the possibility of a boom followed by a bust.”
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