Real estate boom won’t last as estate agents warn of ‘boom followed by collapse’

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House price growth will slow with the withdrawal of government support, real estate agents have warned, with some predicting “boom followed by collapse.”A survey of members of the Royal Institution of Chartered Surveyors, a trade body, found that new inquiries from buyers, instructions to sell properties and agreed sales all rose sharply in July.

Interviewees agreed that the stamp duty holiday played an important role in increasing demand and boosting the market.

While they were optimistic about the level of sales and the growth in house prices over the next three months, the outlook for a year was negative. At that point, the leave scheme will have been unwound and the stamp duty holiday will be terminated.

Simon Rubinsohn, of Rics, said: “Rather, there is still more caution on the medium-term outlook with the macroeconomic environment, job losses and the end or reduction of government support measures to the sector which should havoc. Significantly, some contributors are now even referring to the possibility of a boom followed by a collapse. ”

Anecdotal evidence from Rics members suggests the stamp duty holiday fueled pent-up demand created by the lockdown. Shaun Brannen, a real estate agent in Tyneside, said July was “the best sales month in 29 years in business.”

Respondents were optimistic about house price growth for the first time since March, although agents in London did not report prices had risen. A small majority of Rics members said house prices would rise over the next 12 months.

A separate report from the Resolution Foundation, a think tank, found that even when house prices collapse, first-time buyers will not benefit, as the recession will lead to lower incomes. In the 1990s, the average couple saving 5% of their income could save for a deposit in four years. Now that figure is 21.

The Resolution Foundation said that even if the Office of Fiscal Responsibility’s worst-case scenario for house prices plays out – a 22% drop by the third quarter of 2021 – it would lead to a saving of less than a year. for an average deposit.

This period would be further extended if mortgage lenders repeated the credit crunch that took place during the financial crisis, he added.

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