The government’s apparent focus on increasing the level of property ownership without consideration of the resulting squeeze in the lettings market is likely to raise the cost of renting a home for those most in need of help with housing.
The Royal Institution of Chartered Surveyors (RICS) says it is unlikely the housing market will improve in the near future and has called on the government to view the housing market as a whole and not attempt to ‘fix’ it in separate parts.
A continuous decline in landlord instructions over the last thirteen consecutive quarters has substantially reduced the supply of rental property, resulting in demand for rental properties at its strongest level since 2016. Fuelled by the cost of rental property, rental growth expectation in the near term reached +25% in July, the most positive reading in twelve quarters.
While this is great news for landlords, it’s potentially disastrous for families who are already struggling to meet high rental payments.
Property buyers and sellers
There was a reported rise in home buyer enquiries of 8% in July, the second successive monthly increase seen in most UK regions. However, almost 10% of Chartered Surveyors reported that house prices at all levels had decreased in their area and new sellers coming onto the market declined regionally for the eleventh consecutive month.
Nationally, the sales price of newly agreed property transactions, particularly at the top end of the market, have almost plateaued. Almost 70% of property professionals reported that £1 million-plus homes were selling at a price lower than the asking price. However, nearly 60% of surveyors reported that properties selling below £500,000 had achieved the asking price, although this was less optimistic than three months ago when the figure was 62%.
Sellers and agents have reported widespread concern over the large number of new flats being built in some areas, many of which are priced above the threshold for financial support.
Changes in Buy-to-Let rules have exacerbated the problem, which has resulted in many properties being offloaded by investors and further impacted the marketing of new flats. The resale prices of existing flats, that are often attractive compared to the cost of new properties coming onto the market, have caused concerns that some new flats will even be unsellable.
Meanwhile, the RICS has reported that activity in the construction industry in the second quarter rose by 9% on the previous quarter, following prolonged delays caused by three years of economic and political uncertainty since the country’s decision to leave the EU.
It seems our patience with indecision is wearing a little thin, so let’s hope any future changes to the property market are sustainable across the whole of the housing market.