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‘Vicious cycle: Vendors can’t find anywhere to live, so will not sell, says RICS
A lack of property for sale across almost the entire country is causing a ‘vicious cycle’, as the limited choice on offer to would-be vendors is preventing them from moving themselves, according to the latest RICS survey released this morning.
New vendor instructions dropped back for a sixth consecutive month, with 22% of RICS residential market survey contributors reporting a decrease.
In total, nine of the 12 areas of the country which RICS monitors saw a decline, with particularly sharp falls in East Anglia. Northern Ireland and the north-east of England were the only areas to see an increase in vendor listings.
The picture painted by the RICS is a similar one across the lettings market where it said tenant demand continued to rise, while landlord instructions failed to keep pace once again.
This is expected to lead to an increase in rents across the UK, with RICS members in the west midlands, the south-east, East Anglia and London expecting the sharpest rent rises in the next 12 months.
The report says: “Respondents in all areas agree that the lack of property for sale is causing somewhat of a vicious cycle, as the limited choice on offer at present is deterring would-be movers, and therefore further restricting new instructions.
“Meanwhile, new buyer enquiries rose for the fourth month in succession at the national level. The vast majority of areas reported some degree of growth, with the south-east region the sole exception.”
Alan Metcalfe, partner and joint head of residential at Halls’ Worcester office, said: “A lack of stock is allowing agents to push appraisal values up, with some achieving unrealistically high figures and some sticking.”
Jan Hytch, of Arnolds in Norwich, reported: “Prices are still strong. However, demand is outstripping supply. Any recent properties are going within hours.”
The survey also said respondents were expecting prices to rise during the year ahead. It projected that in 12 months’ time, all areas of the UK were expected to see “sizeable house price growth”, with confidence most elevated in East Anglia and Northern Ireland.
Simon Rubinsohn, RICS chief economist, said: “A renewed acceleration in house price inflation allied to a fairly flat trend in sales activity highlights the very real challenges being presented by the housing market.
“More worrying still is the suspicion that the imbalance between supply and demand will lead to even stronger price gains over the next 12 months.
“This is also visible in the firmer pattern in the buyer enquiries series which has now risen for four months in succession, reflecting, in part, a further modest easing in credit conditions.
“This trend could be brought to a halt when base rates do eventually begin to rise, but the dovish tone to the latest Bank of England inflation report suggests the first move will come a little later than previously thought likely, and that subsequent increases will be very gradual indeed.’’
Research from property search engine Home also shows that the number of homes currently on the market in England and Wales is 11% lower than this time last year and 39% lower than August 2007.
It said that in the southern regions, buyers had only half the choice which was available to them eight years ago.
It also revealed that prices had increased by 0.6% in England and Wales in the past month, going up 1.5% in London.
