Drop in housing stock driving prices higher as housebuilding target set to missed
A significant reduction in housing stock is continuing to drive increases in property prices according to the Royal Institute of Chartered Surveyors (RICS) November Residential Market Survey.
To make matters worse, according to Doug Crawford of My Home Move, just half of the promised 80,000 homes targeted for completion in 2016 will be built. The report by RICS states: “Buyer demand edged up in November with a net balance of 6% of surveyors reporting an increase, the most subdued pace of increase since April.
“Meanwhile on the supply side new instructions to sell fell for the tenth consecutive month with a net balance of 8% of respondents reporting a decrease in new stock coming up for sale.
“The downward in new instructions continues to be reflected in the level of inventory on agents’ books which slipped to a new low in November. Significantly this appears to be holding back activity with respondents reporting a broadly flat level of agreed sales relative to the previous month.”
Making predictions for next year Doug Crawford, CEO of My Home Move said: “Throughout 2016 we expect to see 40,000 new homes built, only 50% of the Government’s annual target of 80,000, but just how many of these end up in the hands of first-time buyers is still up for discussion.”
However Andy Sommerville, Director of Search Acumen, sounded a much more upbeat note.
Andy Sommerville said: “Prices slowing down in London offers a breather for homebuyers, but it’s worrying to see the problem of unaffordability is spreading to the capital’s commuter belt, including the South East and East Anglia, and even beyond. We can also expect to see a surge in prices in the run up to April, when stamp duty reforms for Buy-to-Let investors will come into force, with the hope this doesn’t put a dampener on activity in the second quarter of next year once the reforms have been introduced.
“With the traditional Christmas lull setting in, we shouldn’t be too concerned about the current seasonal lack of stock, however 2016 promises plenty of new homes coming on to the market, with housebuilders boosted by the Government’s Help-to-Buy initiatives.
“It’s also positive to see the Government remains committed to the housing agenda, with the promise of Starter Homes and now a new consultation on green belt planning reform.
“Further planning reform could see a real boost for the supply of new homes, but the Government needs to move quickly so that the industry can get on with building them. Could the Government finally bring a more sensible approach to housebuilding on the edge our towns and cities? Watch this space.”