0:01 AM, 13th April 2023, About 11 months ago 1
Homebuyer demand has now been down for 11 consecutive months – with new properties and agreed sales also taking a downturn, RICS reports.
The cautious market is still seeing house prices fall with agents predicting this trend will continue for the next 12 months.
However, there’s a mixed picture for the price falls with notable drops in London and the South East, East Anglia and the West Midlands.
Despite this backdrop, RICS’ agents are predicting that house sales will pick up in 2023 – the first time they have been optimistic for a year.
RICS also says that landlords are still leaving the market as the number of renters continues to grow – and rents are expected to rise by 4% this year.
This strong tenant demand is seen across the country, but new landlord instructions are still down.
Simon Rubinsohn, RICS’ chief economist, said: “Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics.
“Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.”
He added: “Meanwhile, the rental market remains hugely constrained by the lack of stock.
“Indeed, the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels is striking.
“The shifting tax and regulatory environment are highlighted as impacting the viability of many landlords operating in the sector.”
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “Sellers can’t afford to get carried away. Things may not be as grim as we’d feared six months ago, but buyer demand has been dropping for the best part of a year, so if you’re going to sell, you need to enter the market with clear-eyed pragmatism.
“There are so few properties coming to market that agents are over-valuing in order to win the business.
“Homes then sit on the market without interest or viewings, forcing sellers to drop the price.”
She added: “For those trapped in the rental market, life is getting even harder. Yet another month of growing demand and fewer properties to rent means rents are rising, and even those with enough cash to rent are struggling to find a home. One agent described the market as ‘frenzied’.
“They blame increased legislation – including energy efficiency requirements – which are persuading landlords to sell up.”
She said: “They also say some buy-to-let landlords are struggling to make the maths add up now that mortgage rates have risen.
“Meanwhile, some areas are seeing more landlords switch to more profitable Airbnbs.”
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