RICS - A shortage of homes for sale and to let threatens a rising spiral in sale prices and rents!
The results of the January 2017 RICS UK Residential Market Survey from RICS members again points to a sales market that is lacking momentum, with transaction volumes and enquiries both seeing relatively little change over the month (on a seasonally adjusted basis). New buyer enquiries were more or less unchanged during January.
Having held broadly steady over the past three reports, the flow of fresh sales listings coming to market has again deteriorated. This has ensured average stock levels on agent’s books remain close to historic lows. Members remain confident that house prices will rise looking forward, in all areas of the UK except for in London.
A shortage of supply also remains a challenge in the lettings market, an issue that could worsen over the medium term, as respondents expect landlords to decrease their portfolios over the next three years. Data shows the flow of new landlord instructions failed to improve for a fourth consecutive quarter.
The changes to Stamp Duty, alongside scheduled cuts to mortgage interest tax relief, could well be seen as important factors that will diminishing the attractiveness of buy-to-let as an investment, having an additional negative impact on the market. Indeed, a net balance of 28% more respondents feel landlords are likely to decrease (rather than increase) the size of their portfolio over the next twelve months.
The imbalance between supply and demand is expected to squeeze rents higher at each time horizon rental growth is expected to narrowly outpace house price inflation over the next five years.
Tony Wing DipSurv MRICS FNAEA