Sellers postponed putting their homes on the market because of lockdown restrictions and uncertainty over the Budget, while buyers also held back, according to the latest index from the Royal Institution of Chartered Surveyors.

The net balance for new buyer enquiries was negative for the second consecutive month at -9 per cent in February, but it was considerably improved from the reading of -29 per cent in January. 

New instructions also fell for a second month in a row, with a net balance of -29 per cent of respondents reporting a decline compared to a reading of -40 per cent in January.

Survey contributors reported that some buyers and sellers were waiting for news of whether or not the stamp duty holiday would be extended as one of the reasons for the fall in appetite, while others wanted to delay until lockdown restrictions eased.

This lack of demand from buyers and sellers saw a broadly flat trend in newly agreed sales, with a net balance of +1 per cent of respondents reporting a rise in completed sales.

However, sales activity is expected to rise in the coming three months, with  a reading of +6 per cent, the strongest since October last year.  

House prices look set to continue to climb, with a +52 per cent net balance of respondents reported an increase in prices in February which is up from +49 per cent in January. 

For the year ahead, +46 per cent of respondents expect prices to rise, up from +30 per cent in January.

In the lettings market, a net balance of +26 per cent of respondents reported an increase in tenant demand in the three months to February. 

At the same time, landlord instructions fell according to a net balance of -28 per cent of respondents.

The gap between supply and demand has  strengthened rental growth expectations with +37 per cent of respondents predicting increases in the coming three months. 

Over the next year, respondents expect rents to rise by 2 per cent. 

However, in the capital contributors predict that rents will remain flat.

Rics chief economist Simon Rubinsohn says: “The measures announced last week by the chancellor should help support the housing market over the coming months with concerns around a cliff edge end to the stamp duty break eased. 

‘However, a very clear message emanating from the latest survey is that more needs to be done to address the shortfall in supply with price and rent expectations very evidently continuing to accelerate. 

“Planning reform, which the government is addressing, alongside supporting a sustainable and inclusive recovery in the economy are key elements in encouraging the private sector to increase the pipeline of new build but it is clear that this is only part of the answer, particularly given the impact of low interest rates on demand. 

“It is critical that a holistic approach is taken to the housing market ensuring that policy is designed to deliver across tenures and indeed to improve the environmental quality of the existing stock through a retrofit programme.”

Wayhome chief executive Nigel Purves says: “Despite the efficient vaccine rollout and roadmap out of lockdown, clearly hopeful sellers were still hesitant to actively list their properties, with buyer enquiries and sales also subdued last month.

“Going forward, we should see aspiring homeowners start to warm up to the idea of turning property enquiries into full purchases, and with the stamp duty and mortgage guarantee announcements, we can expect to see even more demand throughout the springtime period.

“That said, this will not be the case for everyone and many will be dismayed to find that even with the 95 per cent mortgage scheme, their household income still doesn’t meet the criteria needed to get their mortgage approved, despite them being able to afford the deposit or a similar amount in rent each month.”