Increased demand from renters mismatching a fall in supply

Increased demand from renters mismatching a fall in supply

11:39 AM, 10th February 2022, About 4 months ago 11

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Demand from tenants in the rental market continued to rise, according to a net balance of +64% of respondents, representing the strongest on record since 1999, whilst landlord instructions remained in decline according to -15%.

Given this ongoing mismatch between tenant demand and property supply, a net balance of +59% respondents said they expect rents to increase over the next three months, an increase on +54% taking this view beforehand. Over the course of next year, rental prices are expected to rise by around 4% on average across the UK.

Surveyors reported more prospective homebuyers in January, a sign that soon-to-be buyers aren’t suffering from the winter blues, however, this came before the most recent rise in interest rates– this according to the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS).

A net balance of +16% of respondents said they’d seen an increase in new buyer demand – up from +9% in December and the strongest reading since the height of the Stamp Duty holiday in May 2021. However, this was reported prior to the Bank of England’s decision in early February to increase interest rates – a move that could put some off from buying a new property.

New instructions fell further slightly (current net balance of -8%), with this indicator remaining negative since April. That said, more market appraisals were reported by a net balance of +3% of those responding to the survey, the first time it has been above zero since June 2021.

The average time it takes to finalise a sale (from listing to completion) has now fallen to an average of sixteen weeks, down from seventeen weeks in September 2021 and the lowest since December 2019, indicating that sale speeds have nearly rebounded to their pre-COVID normal. Sales volumes are also reported as remaining steady during January.

Looking to the next three months, new sales expectations from respondents improved with the latest net balance up to +22%, representing a ten-month high. When looking at the next year, sales were expected to improve by +24% of respondents.

House prices in January also saw no sign of letting up, with a net balance of +74% of respondents seeing an increase. On a regional level, the most significant growth reported in property prices was focused in the Northwest and Southeast of England. All UK regions/countries are anticipated to see further increases in house prices over the year ahead.

Simon Rubinsohn, RICS Chief Economist, said: “The increase in new market appraisals is an encouraging signal that more supply may be funnelled onto the market over the coming months, but it remains to be seen whether any uplift in this area is sufficient to match the resilient trend in demand.

“That said, there is an inevitable question mark over the impact of rising interest rates allied to the jump in the cost of living on homebuyer sentiment.”

“Notwithstanding these developing themes, for the time being the signals on the outlook for both prices and rents remains a little worrisome with the twelve-month RICS indicators for both at, or near, series highs.

“Moreover, this pattern is also being reflected in the metrics designed to capture the trends looking slightly further out.”



Comments

by david porter

11:24 AM, 11th February 2022, About 4 months ago

This was entirely predictable from the finance act delivered by George Osborne.
Section 24 of the finance act 2015 which was implemented in stages. Many
Landlords ceased to be profitable and bailed out. A HMO which housed eight was returned to a family home and housed three. Rental accommodation really has unused bedrooms but owner occupiers need a room in case granny comes to stay. Multiply this across the population and it becomes serious.
So where did those tenants go?
Some were effectively forced to buy and they did so and bought entirely unsuitable properties in locations they will regret. Who wants to live next to an abattoir or opposite a crack house?
This sparked up demand for first time buyers and house prices went up by about 10% last year.
This housing crisis was caused by George. Are you familiar with Dunning Kruger? Do look it up.
Making decisions which are outside of his circle of competence?
And now we are going to have standards imposed as regards quality of accommodation.
All out houses will have money spent on them to bring them into line, No prizes for guessing what will happen to the rents.
We will have an improved R.O.I.

by DSR

11:49 AM, 11th February 2022, About 4 months ago

.... but as a consequence of where the government is taking this, you may well have a tenant, but you will be screwed over if you want to get rid of them for any justifiable reason going forward....

by david porter

12:25 PM, 11th February 2022, About 4 months ago

Reply to the comment left by DSR at 11/02/2022 - 11:49
It is to be hoped that the poor legislation which created controlled tenancies will not be repeated.
War damage and controlled tenancies created slums , Some of us remember this.

by Ross Tulloch

12:29 PM, 11th February 2022, About 4 months ago

The war on landlords is actually a war on tenants as well. We have had to sell several of our properties over minimum room sizes. Which meant evicting 12 happy tenants because we can’t have a permanently empty room. Legal to sleep on the streets, illegal to rent a room that somebody deems too small

by JB

13:44 PM, 11th February 2022, About 4 months ago

You are quite right that every time landlords get kicked, tenants get kicked.

I looked up Dunning Kruger - its seems Osborne was at the peak of 'Mount Stupid'!

by DSR

14:56 PM, 11th February 2022, About 4 months ago

Reply to the comment left by Ross Tulloch at 11/02/2022 - 12:29
ironic. I can supply a small bedsit with private facilities that the tenant can afford to both rent and heat. Many are happy with this - it gives them their independence and stability - they can afford the bills etc. The government in their 'wisdom' decree take away that right and effectively curtained their free will.

Instead as a replacement, they can only offer a hostel bed or B&B at over 500% times the cost to the taxpayer as it would have been to house them independently.
Con-socialism.

by TheBiggerPicture

15:08 PM, 11th February 2022, About 4 months ago

Reply to the comment left by Ross Tulloch at 11/02/2022 - 12:29
Ross, you hit the nail on the head. Legal to sleep on streets, illegal to stay In abitarily small room. It's absurd. Similar to it's legal to work for free(volunteer), but illegal to volunteer for 2 pounds an hour to cover expenses.
Staying in small rooms helped me save a deposit. This is being denied to others.

The irony is, the government get involved to change things. The changes make things worse, and then they exclaim 'market failure' and go more extreme.
Forgetting or avoiding their responsibility. The cycle continues.

by bob the builder

10:27 AM, 14th February 2022, About 3 months ago

'Fall in supply' lol

by david porter

10:30 AM, 14th February 2022, About 3 months ago

Bob
Do you think there has not been a fall in supply?
do let us know?

by Ross Tulloch

10:37 AM, 14th February 2022, About 3 months ago

For us with 13 properties we have had to sell 3, evicting 12 tenants, because of minimum room sizes. Rooms that were easiest to let in Zone 1 or 2 at low prices. The people at the bottom suffer most. So yes I believe this is a fall in supply

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