No let up on the lack of new rental listings coming to the market

The Housing Market readies itself for the latest economic measures to impact the UK housing market, as forward-looking metrics soften, but current activity is still buoyant and house prices are continuing to rise, according to the latest RICS Residential Market Survey. The April survey shows that would-be buyers are still on the hunt for a new home, whilst stock levels and new listings remain scarce. This means that house prices continue to be pushed higher across all parts of the UK.

Looking at the lettings market, (seasonally adjusted quarterly data) there is no let up on the lack of new listings coming to the market as -7% reported another fall in new properties available to rent. To note, this is less negative than the 12-month average of -17%.  Demand continues to also increase as over half (+52%) of respondents saw an increase in enquiries. The long-standing imbalance between supply and demand means that rents are once again expected to rise. Indeed, significantly, +63% of respondents expect them to rise in the coming three months and this is a record high for this metric (records began in 1999)

This month +10% of surveyors reported a rise in new buyers’ enquiries, the eighth successive month in which the survey has returned a positive net balance. However, looking at the number of new properties being listed for sale, respondents have once again reported a subdued trend in listings, -1% of respondents said that new listings were falling instead of rising, albeit this projects a more or less steady picture during the month. Elsewhere agreed sales were flat having risen in each past two months, returning a net balance of -2% in April.

Due to the imbalance between demand and supply, it’s unsurprising that stock levels remain extremely low (38 per agency). Also, the number of appraisals being undertaken has seen little change compared with the same period twelve months ago, which does not seem to bode well for the flow of supply coming onto the second-hand market. The supply vs demand difference also means that house prices have once again risen across all parts of the UK. This month, +80% of respondents reported an increase in house prices, up from +74% in March.

Looking ahead, contributors are anecdotally preparing themselves for some market adjustments given the recent rate rise and the pressure on household budgets. That said, near-term sales expectations remain positive, as a net balance of +12% of respondents anticipate a rise in sales over the next three months. Looking to the year ahead, the net balance has eased for the fourth consecutive report and now -4% expect sales to fall, however, this is signalling a flat trend on the whole.

When looking to the future of house prices, contributors expect prices to continue to rise, albeit to a lesser degree than in previous reports. Looking forward to the next year, +62% anticipate prices to rise, but this is down from +78% in the February survey.

RICS Economist, Tarrant Parsons, commented: “Despite growing macro headwinds in the form of cost-of-living pressures and higher interest rates, the UK residential market continues to see modestly positive trends in new buyer enquiries. For the time being at least, even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices. As such, there is little evidence at this stage of house price inflation losing much momentum, while expectations for the coming twelve months have only moderated slightly from recent highs.”

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