House sales picked up sharply in March as stamp duty holiday was extended

House sales picked up sharply in March amid signs that the extension of a stamp duty holiday had an immediate impact on the housing market, according to surveyors.

A net balance of 50% of property professionals reported an increase rather than a decrease in agreed sales, the Royal Institution of Chartered Surveyors (Rics) said.

It marked the strongest sales surge since last August.

A stamp duty holiday had been due to end on March 31, but this was extended in the recent Budget.

The stamp duty “nil rate” band will now not revert to normal levels until the autumn.

The current stamp duty threshold under the holiday is £500,000.

This will fall to £250,000 from July 1, and from October 1 it will fall to £125,000, where it usually sits.

The pick-up galvanised expectations that sales activity will increase over the next three months, with a balance of 35% of surveyors predicting an uptick. This was the most upbeat reading on this measure since January 2020.

Rics said that with demand for homes continuing to outstrip supply, house prices increased, with a net balance of 59% of surveyors seeing an increase since February’s survey was published.

House prices were reported to be on the up across all of the UK’s nations and regions, with the strongest momentum seen in the north west of England, Yorkshire and the Humber and Northern Ireland.

An overall balance of 60% of surveyors expect prices to be higher rather than lower in 12 months’ time.

There were indications that the supply of properties coming on the market could increase in the coming months, with a net balance of 29% of surveyors reporting an increase rather than a decrease in appraisals.

Looking at the rental market, tenant demand increased while new instructions from landlords decreased.

Professionals generally felt this would place an upward pressure on rents.

London was the only part of the UK where rents were expected to remain the same or fall.

Simon Rubinsohn, Rics chief economist, said: “The results from the latest Rics survey show that the decision of the Chancellor to extend the stamp duty break and then taper its expiry has had an immediate impact on the housing market, with all the key activity indictors rebounding in March.

“However, the headline numbers as well as the anecdotal remarks from respondents clearly demonstrate that across much of the market, demand is outstripping supply and that as a result, prices continue to move upwards. More worryingly, this is also being reflected in the price expectations data both at the 12 months horizon and beyond.

“Meanwhile the lettings market is displaying a broadly similar characteristic in terms of the relationship between demand and supply according to the Rics data, with the notable exception of the numbers for London.

“Significantly, despite rents moving higher, contributors continue to point to the less favourable environment for investors in the market as playing a key role in fuelling this imbalance.”