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EU referendum causing uncertainty in UK property market with prices set to fall
Increasing uncertainty is weighing on the UK residential property market which could result in prices falling, according to the latest monthly housing report from the Royal Institution of Chartered Surveyors. The report paves out a scenario where prices could experience a short term drop due to uncertainty surrounding the referendum later this month on the future of the UK in the European Union. It would be the first such fall since 2012. The most recent polls are putting the Leave campaign marginally ahead of the Remain campaign and in many areas of business and economic life in the UK this is causing a wait and see attitude. This is already affecting the property market according to the RICS report which says that prices across the UK saw only modest growth in May while prices in central London fell. On top of this demand from buyers is falling at the fastest rate in eight years. RICS predicts that house prices nationally are set to dip over the coming months, while rents increase while in central London some 35% more property professionals are reporting that prices had fallen rather than risen over the past month. While prices are continuing to climb modestly across the rest of the UK, this trend looks set to fade, with 10% more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012. London and East Anglia are expected to be worst hit with 43% and 33% of respondents saying that prices will fall over the next quarter. ‘Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market. Instead, it appears to me that what we are looking at is a short term drop caused by the uncertainty resulting from the forthcoming EU referendum coupled by a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties,’ said Simon Rubinsohn, RICS chief economist. ‘Certainly, that’s the story we are hearing from our members. There is not at this point a sense that a fundamental shift is taking place in the market,’ he added. Buyer demand fell across the UK for the second consecutive month and at the fastest pace since 2008, with 33% more property professionals saying that demand decreased last month. The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rents look set to outpace them, with UK rents predicted to increase by 4.7% year on year for the next five years, compared to house price increases of 4.1%. The number of agreed sales also fell for the second consecutive month with a net balance of 22% of respondents reporting a fall rather than a rise in activity. However, Thomas van Straubenzee of prime London property agents VanHan, believes that… Continue reading
Large drop in new properties coming onto market in England and Wales
The supply of properties for sale in England and Wales has slumped in recent years to alarmingly low levels, according to latest figures to be published. The property search engine Home.co.uk has recorded a 51% fall in the number of properties for sale in England and Wales over the last eight years, from 855,585 in April 2008 to just 415,038 in April 2016. There has also been a 26% decline in the number of properties for sale in April 2010 compared to April this year. In addition, there was a 12% decrease in the total stock of property for sale in April this year compared to the same month last year. These figures are published as the firm’s latest asking price index shows there were price rises in all parts of the UK in May, with the mix-adjusted average asking price for England and Wales jumping 0.8% since April. Further figures looking at new properties coming on to the market each month offered only a small crumb of comfort that the situation may improve, the research also shows. These latest monthly figures found there had been a modest 4% increase in the number of new properties coming on to the market in April 2016 compared with April 2015. However, this is still 43% down on April 2008's new monthly listings figures. April 2016's new properties tally of 110,031 is also 7% down on April 2010's figure of 117,803. A regional breakdown of the figures shows that every mainland UK region has seen a marked downturn in the number of new properties coming on to the market when comparing April 2008 with April 2016. In the East Midlands, South West and West Midlands, there was also a dip in supply of new properties between April 2016 and the same month last year, while two areas, the North East and North West, recorded no change at all in supply when comparing April 2015 and April 2016's figures. Greater London saw a sharp spike of 22% in supply of new listings when comparing April 2015 and April 2016's figures but this is still 53% down on April 2008 and 8% down on April 2010's figures. This shows that despite the recent surge in new listings in the capital, its overheated market is still in dire need of more properties. There was a small increase in new properties coming on to the market between April 2015 and April 2016 in the South East, but this affluent area still has a chronic supply problem. An eight-year comparison in this region reveals a 44% dip in the number of new properties for sale in April 2008 and in April 2016. Elsewhere, Scotland's new monthly property tally in April 2016 was 36% down on figures for April 2008 and in Wales the figures were down by the same proportion. The East of England and Yorkshire and The Humber saw 3% growth in new properties for sale in April 2016 compared with April 2015. However,… Continue reading
Almost all towns and cities in UK see new rental supply drop dramatically
New rental properties listed by landlords in the UK in May fell by 15.4% compared to the previous month with 91% of towns and cities recording a fall in supply, new research shows. The biggest fall in rental supply was in Worcester with a decline of 42.6% month on month, followed by Bedford with a fall of 41.7% and in Derby it was down by 41%, according to the figures from property crowdfunding platform Property Partner. Much of the decline is probably due to a rush of landlords putting rental properties on the market in April ahead of stamp duty changes, according to the firm’s report. It also shows that new listings fell so far in many areas of the country in May, that they actually dropped substantially below March levels, before the 3% stamp duty surcharge for additional homes came into force. ‘As anticipated, the rush of investors buying before April’s stamp duty hike caused a temporary spike in rental supply, which now seems to have been swiftly reversed,’ said Dan Gandesha, chief executive officer of Property Partner. ‘New rental listings in May were down almost 6% on March, before the surcharge spike. With high and rising demand, any prolonged fall in rental supply would only have negative consequences for tenants,’ he explained. He predicts that it’s likely that rents would increase as landlords, facing less competition, pass on their additional purchase costs to tenants and a lack of available properties would also force more tenants into accepting poorer quality accommodation, particularly in areas with an acute shortage of stock. ‘June’s figures will show whether this is just a market adjustment, or something more fundamental. It’s unfortunate timing with the European Union referendum just two weeks away,’ Gandesha pointed out. ‘But April’s stamp duty changes are just the first in a series of additional costs being piled on traditional buy to let. In the longer term, the private rented sector must be professionalised, to provide Generation Rent with enough good quality homes at rents they can afford,’ he added. Continue reading
