Longest Uninterrupted Sequence Of Declining Landlord Instructions Since Records Began
The housing stock entering the UK property market is at its lowest levels since the UK decided to leave the EU in June 2016. Similarly, the decline in landlord instructions has consecutively fallen for almost 3 years, representing the longest continual fall since records began in 1998.
According to the RICS UK Residential Market Survey report for April, there was a ‘sharp decline’ in new instructions entering the market with 35% more contributors citing the current lack of housing stock and subsequent limited choice as a significant factor in hindering market activity at present.
Sales expectations for the next three months have improved slightly but remain negative with -11% of contributors feeling as though the current climate is stifling sales and preventing growth. However, this has improved from the fifth of respondents feeling pessimistic about market activity in March.
Worryingly, 28% of respondents found that the sales that are taking place in the current property market are at least 5% below their original asking price. Whilst this figure may concern some, 62% of properties priced below £500,000 are coming in at the sales price; this represents an improvement from October 2018 when only 58% of residential property was meeting the sales price.
As the market tightens and begins to contract, the real losses remain houses priced over £1 million. Here 66% of contributors have found sales prices below the intended asking price.
Even though the short-term outlook remains flat and subdued, 13% anticipate improved sales within the next 12 months. Unfortunately, the private rental sector may present a very different long-term picture for the growing number of tenants entering the rental market.
The RICS survey for April has highlighted that the private rental market could face more upheaval than any other. Tenant demand is on a ‘gently upward trajectory’ of 3% for the next five years whilst landlord instructions continue to ‘dwindle.’ The latest decline in the number of properties registered by landlords continues a pattern that stems back to the summer of 2016.
This figure of depression in the buy-to-let sector is the longest uninterrupted sequence of falling since records began in 1998. The report states that the situation is only set to worsen with anecdotal evidence suggesting the Tenants Fees Bill and the proposed abolition of Section 21 are set to deter investors from entering whilst also encouraging landlords to leave the sector.
Simon Rubinsohn, chief economist for RICS, said:
“Although there are signs of greater realism on pricing from vendors, there is little conviction in the feedback from respondents to the survey that activity in the housing market will pick up any time soon.”
What do these figures suggest for the conveyancing sector?