Lack of new properties to let putting pressure on prospective tenants

A slowdown in the supply of new homes in April has seen price growth accelerate across the UK, according to the RICS Residential Market survey, April 2021. Meanwhile, a lack of new properties to let has also put pressure on prospective renters.

Tenant demand for rental properties picked up over the quarter to April – with a net balance of +60% citing an increase across the UK. This is an improvement on January’s figure of +14%, which respondents put down to the loosening COVID-19 restrictions and the positive outlook as more adults are vaccinated. However, this is met by a falling supply of vacant rental properties which respondents predict will place upward pressure on rents).

Looking at new buyer demand, a net balance of +44% of respondents saw enquiries pick up over April (nearly unchanged from the previous +43% in March). For the first time this year respondents reported new buyer demand was positive across every region.

A lack of fresh listings was the biggest concern cited by respondents – with many saying it was not nearly enough to match the interest shown by potential buyers. Respondents reported that new instructions from owners looking to sell-up eased significantly, with the latest net balance of -4%, marking a steep decrease from +21% in the previous month. On top of this, stock levels reported by estate agents dropped, with the average number of properties on their books now at 40, having stood at 46 in December 2020.

Unsurprisingly, therefore, house price growth rose again in April – with a net balance of +75% noting an increase in prices at the headline UK level. This is up from +62% in March and the highest growth seen over the last three surveys conducted. More respondents also predicted prices going upwards over the next quarter, with net balance of +47% in April, compared with +43% in March, and this increased to +68% when looking at the next year as a whole.

Agreed sales were up over the month with a net balance of +34% reporting deals on homes completing – however this was seemingly at a slower pace than in March (+48% net balance). Short term expectations for future completions were also positive as a net balance of +23% of respondents said they were expecting more sales. This positivity cooled off when looking longer term as just +12% thought more sales would complete over twelve months – possibly in anticipation of the stamp duty holiday ending in its current form at the end of June (followed by a tapered withdrawal through to September).

Simon Rubinsohn, RICS Chief Economist, said:

“Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey. While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low-interest rate environment, an uplift in delivery does have a role to play.

“Planning reforms as outlined in The Queen’s Speech are likely to provide part of the answer, although it is critical, particularly with regard to permitted development rights, that quality and safety are not compromised.

“Ensuring a broad range of tenures in the delivery pipeline is also important with anecdotal evidence from the survey emphasising a severe lack of stock in the private rental market as likely to drive up rents sharply over the next year.”

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