News

Property supply continues to fall

By Will Leyland, 09 November 2016

The already struggling property supply chain contracted further throughout October, it has been confirmed. Property market analysts were already concerned with a level of supply far below consumer demand, but figures from House Simple show that four out of five UK towns and cities experienced a further drop in property supply in October.

The number of new listings on average across the UK was also down 6.9%. In September, supply levels were up following the traditional summer property market lull. However, in October – a typically busy month for property market activity – new property listings fell in 81% of towns and cities.

London was no exception, as the number of new listings dipped 1.5% in the capital in October compared to September, while the number of property listings in Swansea and Stirling were down 52% and 37.7% respectively on the previous month.

To compile the index, researchers looked at data on more than 500,000 listed properties to track the number of new properties marketed each month in more than 100 major towns and cities across the UK and all London boroughs. The situation, however, is failing to improve. Only 19% of towns or cities saw an uplift in new properties listed in October.

The news represents both good and bad news for landlords. The good news is that rental demand will remain extremely high and as such rental yields and tenancy rates will remain strong. Incomes and profits will stay healthy for landlords who have existing portfolios but a further issue is their ability to build on their existing stock. With demand and supply being so drastically out of synch this will push prices up meaning existing properties will see capital gains but acquiring further properties may become more difficult.

Tenant satisfaction has been increasing steadily over the last 24 months as tighter regulations on letting agents come into force and the overall service becomes more focused on the customer. As reported by Intus Lettings recently, the number of landlord disputes is falling and this has meant that, despite the reduced number of available properties, the majority of existing renters are pleased with their current situation.

Further to the reduction in available stock, registrations for new homes dropped 5% during Q3 2016, according to the latest registration figures. During the July to September quarter, 26,762 new private homes were registered in the UK. Meanwhile, registrations in the affordable homes sector grew 18% to 9,191 new homes during the period. At 35,953, the total number of registrations was virtually identical to the 35,954 of Q3 2015.

A low level of private registrations in July following the EU referendum vote has dragged down the quarter, it seems, with August and September seeing the strongest level of registrations since 2007.

A housing supply crisis isn’t exactly headline news considering there have been a number of issues in this area for some years now. Generally speaking, this is positive news for landlords – as their capital grows and they’re able to raise rents, profits will increase. As Brexit continues we may well see confidence return and a rush of available properties on to the market.

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