Increase in housing supply not enough to dampen price rises – RICS
Available housing stock has increased for only the third month of the last eighteen months according to the Royal Institute of Chartered Surveyors Residential Market Survey.
However 49% of Surveyors have reported price rises this month with current stock still significantly lower than at any other point in the last 15 years.
The survey also indicates an increase in prospective landlords snapping up buy-to-let properties ahead of April’s 3% stamp duty surcharge, with new buyer inquiries up for the tenth consecutive month. 74% of respondents also said they expect there to be an increase in property purchasers by buy-to-let investors prior to the tax’s introduction.
The report stated: “RICS Members were also asked whether or not the implementation of various government measures relating to the sector (mortgage interest relief will be reduced to only the basic rate of income tax by 2017) would in due course lead to an exit of buy-to-let investors.
“The results to this question were not quite so emphatic. Indeed, 50% of survey respondents felt these initiatives would lead to an outflow of landlords, 31% felt they would not, while 19% were unsure. Either way, for now, future changes to the treatment of the buy-to-let sector appear to have stoked demand from investors.”
Andy Sommerville, Director of Search Acumen, said: “Housing supply has risen – a drop in the ocean, but a much-needed one given the strain this early-2016 rise in house prices will place on homebuyers looking to move in the first quarter, in the middle of the buy to let fever. The housing problem is a national issue, but with London’s population reaching a peak all-time high of 8.6m, the concentration of new housing developments in the city is welcome and will provide some respite to city dwellers.
“As expected, buy to let reforms have the market in thrall, and surveyors, estate agents and conveyancers are going to be kept very busy in the first quarter; however, this spike is merely a redistribution of annual volumes as BTL landlords look to complete their transactions before the April deadline. The market is going to stabilise, or even slow down slightly, once these transactions that would have otherwise happened later in the year, are complete.
“The lack of landlord instructions in spite of a growing need for rental properties, however, is a foreboding sign of rent becoming even more unaffordable for younger people, and this problem may get worse if landlords decide to simply pass on the extra stamp duty costs to their tenants in the year ahead. The only solution to ever-rising rents is to increase the number of rental properties in the market.”