Will Leyland, 19 December 2016
It has been reported this week that, due to extraordinarily high demand in 2016, there will be a slight slowing of the property market early next year due to low levels of available stock.
The report, released by RICS Residential Market Survey, stated that the number of prospective buyers rose again in November for the third month in a row with 13% more surveyors reporting a rise in new buyer enquiries rather than a fall.
Increasing demand is also leading to a further rise in agreed sales across the UK. 9% more respondents across the country reported a growth in activity over the month but while this is the highest reading since February, supply shortages remain a damaging issue, according to RICS.
House price growth remains healthy, with The Halifax reporting that property value rises had accelerated in November, a picture mirrored by the RICS survey which shows a net balance of 30% of surveyors reported house prices rising rather than falling in November. These are the best figures seen since April.
Although the survey recorded an increase in enquiries from potential new buyers, relatively few homes are being put on the market. Added to this, many are being bought quickly which has meant there is little to choose from for these buyers.
The findings tally with other recent market surveys which have pointed to a recent pick-up in price growth following a post-EU referendum pause.
At the top end of the scale, changes to the structure of stamp duty have made the tax more expensive for some people buying top-end homes while a hike for buy-to-let investors has also affected the market.
The Government has responded to calls for more action on the building of new homes, with a series of measures announced before and in the Autumn Statement including cash to help accelerate the planning process.
Near term expectations continue to point to rising prices over the coming three months with 14% more surveyors anticipating an increase rather than a decline.
As landlords come through a rocky 12 month period following tax announcements and the European Union membership Referendum result, this represents mixed news. On the one hand, the higher prices and lower stock combine to increase rental demand but, conversely, housing markets can be volatile.
In the short and medium term there is certainly reason for buy-to-let landlords to be positive. Firstly, due to first time landlords being put off by tax increases and others leaving the sector, there is now an opportunity for expanding and making the most of a housing sector which is desperately in need of more rental homes.
Secondly, the lack of available stock increases prices meaning that capital gains on existing property portfolios are growing more quickly than usual thanks to an increase in demand for what is available. Rental income is the primary focus for many landlords, but capital gains on existing property is always a huge positive.
Added to this, the increased letting agent regulation has meant that good and reputable agents are now in the majority and the required effort for landlords is dropping whilst demand increases dramatically.
Will Leyland, 19 December 2016