The Government has been warned that it must see the housing market as a complete entity, not as separate parts.
The RICS this morning says that Boris Johnson’s new administration seems to be concentrating on raising levels of home ownership, but that falling supply in the lettings market is set to squeeze rents higher.
It says that tenancy demand is at the highest since the end of 2016, but that landlord instructions across the lettings market have fallen continuously for the last 13 quarters.
Agents taking part in the survey are forecasting near-term rental growth.
The RICS also reports that agents have negative expectations for house sales and prices.
New buyer demand is slightly up but transactions have remained flat, and newly agreed sales have slipped.
The shortage of stock new to the market persists, with an 11th consecutive monthly decline in new listings.
The gloomy RICS report says there is little prospect of a sustained rise in supply in the immediate future.
Simon Rubinsohn, RICS chief economist, said: “The latest RICS results will provide little comfort for the market with all the key indicators pretty much flatlining.
“Indeed, the forward looking metrics on prices and sales also seem to be losing momentum as concerns, clearly voiced in the anecdotal feedback, both about Brexit and political uncertainty heighten.
“Meanwhile, the lettings market data continues to send a very strong message that institutions need to upscale their build to rent pipeline to address the shortfall resulting from the decline in appetite from buy-to-let investors.”
The RICS survey is based on 334 responses covering 604 estate agency branches in England, Scotland, Wales and Northern Ireland.
Comments (15)
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The whole state of the market needs a much more fundamental adjustment than most of those commenting have posted so far.
Lateral Thinking Is Needed On House Affordability
The latest RICS survey is based on 334 responses covering 604 estate agency branches in England, Scotland, Wales and Northern Ireland. This level of response appears to be around a half of the branches they monitor, which seems rather low, considering the rate change in the present and rather concerning economic indicators.
My comment on Simon Rubinsohn, RICS chief economist’s Report is as follows.
I don’t view the housing market as being a single entity at all but a market having many different locations or separate parts. The U.K. housing market, in fact, functions as a set of ‘local’ markets combining both property available for sale and to let.
The primary indicator when determining house prices in each location should be local ‘earnings’. There are additional factors such as desirability and current level of demand but fundamentally, prices should be tethered to or relate to local affordability in each area. As is well known this is not happening at present, resulting in asking-price confusion which itself is leading to the sales stagnation we are currently experiencing.
The final outcome from such stagnation is obviously declining profits for estate agents.
It’s high time these unhealthy trends are reversed. One of the additional effects of these trends is the increase in demand for rental accommodation with the corresponding decline in house ownership. Rent levels have risen on account of the significantly increased demand.
Irrespective of this and now that a hard deadline has been signalled, there is going to be a negative effect on house prices caused by Brexit and this factor should be something to watch in addition to the above. The main issue for agents when deciding on pricing property, both for sale and to let, is its specific location and the local buying power which exists there as explained.
RICS does not appear to be looking at things in this light so I am now keen for this to be tabled for a detailed discussion with them.
The financial sector, as we know, plays a fundamental role in mortgage lending and the extent of such lending has a noticeable affect on the resulting levels of prices for each and every property sold or let. Unfortunately, the prices gained using existing marketing methods are generally unrelated to local affordability.
My own analysis of the situation that exists within all housing markets across England and Wales (that being the relevant sector for action by central government) is reasonably well known now. My fully set out reasoning may be found on my internet blog. Google The Hendry Solution for access. Views by interested parties may be freely expressed there and may be published provided those involved are willing to register their contact details of course.
We need some seriously good economic and political decisions to be made to re-balance and to stabilise house prices across all the individual regions within our government’s jurisdiction for forward progress to be made.
I would welcome proper discussion by experienced organisations on the way to resolve what has become an enduring house-price crisis and especially by RICS as a main player and advisor. If Mr Rubinsohn does not read The Property Industry Eye to find out about about my alternative proposals himself, I hope someone will let him know about it.
Having read your blog, I would stick to your boat and fishing. I’ve never read anything so left wing, narrow minded rubbish trying to sound important, anti estate agent. I question your grasp of the real world and focus is biased on belittling an industry and after moan, moan, moan, not actually coming up with any solutions or credible commerce to a solution. You shoot yourself in the foot that many times, it became painful to read.
Hi Woodentop,
I don’t think I’ve publicised my political leanings, which are not binary in aspect or choice. I don’t have a boat and I don’t fish either 😉 .
My interpretation of your concern is that you appear to be displaying an underlying fear of change, even as it is becoming abundantly obvious that change across the whole agency sector is needing to be embraced.
If you want to show your clarity of mind and willingness to help improve the present situation for the benefit of all users, please select any two aspects of what I am recommending on my blog and let’s chat there.
I’m open to that.
Then why post here? Its you that went on about fish and boats, leaning towards socialism and anti-capitalism in your blog.
You don’t seem to grasp the “right of ownership”.
You infer that in general all agents and surveyors are dishonest and collude. Shameful. Clearly you have very little understanding of the real world regarding commerce and even less about estate agency. Seems a little bit of knowledge is dangerous! If you wish to change the home buying process from the current status quo you need to address your solution to the Governments Housing Minister, rather than belittle the industry for your own enjoyment.
I’m posting here because I have worked as an estate agent myself and have known several others whom have also done so. Many experiences have been shared over the years.
I posting here because I aim to present my proposals not simply to high office alone (I am already doing that) but also for the grass roots of estate agent’s work-force upwards, to consider.
I happily invite you and others whom you feel may have something to contribute, to help improve the present imperfect situation and lack of sufficient sales turnover, for the benefit of all users. As just invited, please select any two aspects of what I am recommending on my blog and let’s chat there if you genuinely would like to. This place is not the correct medium for going into the detail of developing new ideas for revolutionising estate agency.
And why isn’t this the correct medium? That has to be the statement of the year.
What have you to hide, considering this is an industry forum! Having read your blog it doesn’t take a genius to work out why.
Agents are seeing:
Lack of rental properties
Rents rising
Landlords refusing to take risk with tenants
Lack of good tenants…. the world seems full of rogue tenants wasting time, now they can hide from commitment/penalty to be honest applicants (tenant fee ban).
Time wasted dealing with enquiries agents are instructed by landlords and insurers as not suitable applicants because some idiot says we are not allowed to warn them in advance (well done web portals).
Lack of new landlords …. who would want to be a landlord today under the new tax and a regularity regime which is biased in favour of tenants and costing landlords £K’s never able to recover months down the line!
Factor in abolition of s21 and landlords will be even more selective as it will be increasingly difficult to remove bad tenants who slip in “under the Radar”. My own application form for tenants has quadrupled in questions to firstly try to weed out those less likely to pass referencing (particularly as I am now paying for referencing) and secondly to be able to find any tenant untruths as if they intentionally mislead me I can keep their holding deposit – Not the aim but a form of compensation for lost time if they do intentionally mis-lead me to get a tenancy. These are the unseen consequences of our so called clever people in Government and emotive so called housing charity we all know and love (bless them). Who suffers most? those people in the less fortunate situations who previously may have stood a chance but will no longer stand up to the increased scrutiny. If I have any doubts whatsoever I will not even waste time on doing viewings as with the S21 proposals we cannot afford to get things even a little bit wrong.
A shortfall in rental supply?!
Wow, who could possibly have expected that? Good job the government actioned some well considered plans to mitigate this in advance…
I must live in a different world. I have had one property on the market for over 2 months before finding a half decent applicant; most of the others were on benefits and not accepted by my loss of rent insurers. The tenant fee ban is taking full effect as landlords are becoming highly selective as they don’t want to waste referencing fees on no hopers. Another property has just been put on the market which traditionally lets in a matter of days (good location about 3 minute from a railway station with a 14 minutes journey time to London Bridge) and there have been 2 enquiries, one from a person with an IVA but claiming to have a good credit history. The other was not suitable as dogs in upper floor flats can cause problems, particularly with noise senstive neighbours. Both properties are in renovated condition and imaculate. They usually let within 7 days. I know that local agents are also seeing low demand with properties sitting around for quite a while. What lack of supply? My guess is the RICS are in a different world or are base their report on historic statistics. So much published out of date nonesense. So What Housing Crisis? now many eastern europeans find better earnings in mainland europe due to the mishandling of Brexit and plumeting exchange rates not to mention Mrs May’s hostile environment (to landlords as well as illegals!).
The rapid rise in the cost of living in the last six months is the real problem.
Of course this stems from Brexit and the falling pound making imports more expensive.
The people of the UK voted for this fiasco, not knowing what they were letting themselves in for – could be a bumpy couple of years for many.
J1 your are right the people voted and that vote was closely to leave. The fact is many politicians do not want to leave the EU and they are dis-respecting the democratic decision that was made dressing it up with what ever argument they feel might support their personal view. It is the uncertaintly that is causing the problems and continues to divide the country and the generations. The constant landlord bashing by Government is causing the same discontent and problems in housing, and abolition of s21 will have serious consequences. This will happen and the consultation is only on how it happens NOT if it happens. The Government have “lost their marbles” and act like children.
Cost of living for the past decade I would say. The Brexit fiasco isn’t helping any, but I suspect changes on buy 2 let, house prices against poor wage growth are the bigger factors.