THE housing market remains subdued while the rental sector continues to heat up, according to the latest UK Residential Market Survey from RICS.
The June 2018 report shows that over that month, newly agreed sales recorded the 16th successive month of continued decline, with 7% more respondents reporting a fall in agreed sales.
Furthermore, new buyer enquiries is showing “little reason to expect any uplift”. The number of people looking to buy remained flat in June, prolonging a trend which dates back to late 2016.
RICS said this is likely to persist through the second half of the year with the time taken to complete a sale edging up from around sixteen weeks (Spring 2017) to around eighteen weeks at present.
For the second month in a row, new instructions have risen, with 10% more respondents seeing an increase in the flow of properties being put up for sale. However, with average stocks remaining close to historic lows at 43, the organisation says it would be too early to suggest that this issue is “lessening as an obstacle”.
The lack of activity on the sales side also continues to impact prices. At the headline level they remained flat in June, and it is the 13th consecutive month that chartered surveyors have reported a sluggish picture, with respondents not anticipating much change in the coming three months either.
“It is hard to see what is going to provide much impetus for activity in the housing market in the near term,” said Simon Rubinsohn, RICS’ chief economist. “Meanwhile the on-going challenges around lifting the delivery pipeline, reflected in last week’s disappointing data on housing starts, is captured in the suspicion in the survey that prices are likely to resume an upward course over the coming year.
“The challenge is also visible in the response of the private lettings market to change to the tax treatment on investment properties. While it is understandable that the Government wanted to provide a lift for first time buyers, this may well come at the cost of higher rents as the appeal of buy to let diminishes.”
When it comes to lettings, RICS’ report said that new instructions coming through to agents has dropped “again”. The organisation said this is the 21st consecutive month that the feedback it has received has pointed to a lower supply of rental properties coming to the market. The lack of supply suggests a cumulative average rise in rents of 15% over the next five years.
“This is one of the most complicated market situations that we have seen in some time, and with some of the working policy solutions taking a long time to get to market we’re seeing a difficult situation get worse,” said Geoff White, RICS’ policy manager for the North and Midlands regions.
“The situation in the private rented sector gives great cause for concern as supply continues to drop. It would appear that new policy on taxes and Stamp Duty have made it so difficult for landlords at a time when the UK needs more homes to rent, that many continue to exit the market. A standardised set of regulations would go some way to help ease the life of both those renting and those looking to let, and RICS continues to ask Government for greater regulation through adopting the Code of Practice used by RICS professionals and others…
“Faced with the uncertainty around Brexit, recent government changes and a shortage of skilled trades such as bricklayers, as identified by Sir Oliver Letwin, and you can see how the new housing minister Kit Malthouse – the eighth person to have that title since 2010 – has his work cut out.”