Housing market at critical tipping point, say Savills

The housing market is at a critical point, says Yolande Barnes, head of residential research at estate agents Savills. 

Yesterday, she said the emergency Budget would be of critical importance in determining the mid-term outlook for residential markets.

“Our research suggests that mainstream property markets are at a tipping point, as subdued demand is being met by increasing supply of marketed stock,” she said.

“The abolition of HIPs should encourage more vendors to test the market so we expect to see steady increases in the number of homes for sale. This reversal of stock shortages that we saw last year should halt and may even reverse price rises.

“The propensity of the market to fall will be determined by the number of distressed sellers in it. In this respect, it appears that the quantity of repossessed stock will remain minimal as the assurance that repossession will be a ‘last resort’ outcome will provide a welcome cushion.”

She said that although austere fiscal measures and public spending cuts could rock sentiment in all markets, the prime markets are more prone to financial market movements and policies affecting high-earning and high net worth individuals.

She said policies that might impact on the appeal of the UK, and London in particular, as a place to invest and do business, would be very important. The cumulative effect of the bonus levy, 50% tax and threats to non-dom status were already making the UK less attractive to international investors. 

“The announcements on Capital Gains Tax rate changes may further discourage second-home owners and landlords in these markets,” she added.

“Many clients are consulting their advisers on how best to minimise their liability, while others are reconsidering the role of property within their portfolios. A worst-case scenario would be a flood of disposals, and a surge of new stock. In this respect, the timing of any changes is critical.”

The 'tipping point' phrase, used to describe the housing market, was also used by Rightmove last week.