RICS UK Residential Market Survey – New instructions from landlords remaining in decline

With new instructions from landlords remaining in decline (slipping from -6% last month to -20% in July), rents are now expected to rise over the next three months. This is according to a net balance of +50% of RICS member respondents. Rental expectations in London have seen a particular turnaround, with a net balance of +47% of respondents in the capital expecting rents to increase (whereas -3% respondents felt rents would shrink in the three months to April).

New buyer enquiries slowed in July, with the Government’s Stamp Duty holiday beginning to taper off, with a net balance of -9% of respondents seeing a fall, down from +10% in June, and ending a positive four-month streak for the UK housing market. As a result, the number of agreed sales also reportedly took a dip, posting a net balance of -21% in July across the UK, with sales volumes slowing most notably in Yorkshire & the Humber, the East Midlands and East Anglia.

House price growth was again influenced by the lack of properties ready for sale, with a net balance of -46% of respondents reporting a fall in new listings (down further from the -35% reported in June). It is therefore unsurprising that +78% of respondents reported house prices rising, although this is slightly down from the +82% reported in the past two months.

At the regional level, growth in house prices was seen across the UK, with the North of England, Wales and East Anglia seeing especially strong growth. On the flipside, London saw more moderate feedback, however the latest net balance of +45% is still up when compared with previous results.

A net balance of +66% of respondents nationally predict that prices will continue to rise over the next twelve months, up on the +56% from June.

Demand from tenants looking to rent new homes remained strong for the fifth quarter in a row, with a net balance of +52% reporting a rise, with all parts of the UK experiencing growth from budding renters.

Simon Rubinsohn, RICS Chief Economist, said: “Although the tapering in stamp duty is beginning to have some impact on RICS activity indicators, the overall tone to the market remains firm with the metrics capturing price expectations showing few signs of wavering.

“Significantly, a strong message from survey respondents is that buyers are continuing to place a premium on space with the prospect of a hybrid model of work being adopted by many organisations providing the opportunity for greater flexibility around location.

“This is being reflected both in the challenge some current homeowners are having in moving up the property ladder as well in stronger price expectations from the RICS survey for larger than smaller properties.”

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