A shortage of homes on the market is causing would-be vendors to avoid selling their house, as they cannot find a new property to move to, claims the latest report by the Royal Institution of Chartered Surveyors (RICS).
New vendor instructions fell for the sixth consecutive month, with 22% of RICS residential market survey contributors reporting a drop.
Nine of the 12 parts of the country that the RICS monitors experienced a decrease, with a particularly sharp fall in East Anglia. Northern Ireland and the North East of England were the only areas to report a rise in vendor listings.
Vendors Can’t Find Homes So Aren’t Selling
The lettings market is similar to the property market, states RICS, as tenant demand is continuing to rise, but landlord instructions are not keeping pace.
The RICS believes that this will cause an increase in rent prices around the UK, with members in the West Midlands, South East, East Anglia and London expecting the highest rent rises over the next year.
The report states: “Respondents in all areas agree that the lack of property for sale is causing somewhat of a vicious cycle, as the limited choice on offer at present is deterring would-be movers, and therefore further restricting new instructions.
“Meanwhile, new buyer enquiries rose for the fourth month in succession at the national level. The vast majority of areas reported some degree of growth, with the South East region the sole exception.”
Partner and joint head of residential at Halls in Worcester, Alan Metcalfe, says: “A lack of stock is allowing agents to push appraisal values up, with some achieving unrealistically high figures and some sticking.”1
Jan Hytch, of Arnolds in Norwich, adds: “Prices are still strong. However, demand is outstripping supply. Any recent properties are going within hours.”1
The study also found that respondents expect prices to increase during the next 12 months. It predicts that in a year, all parts of the UK will see “sizeable house price growth.”1
Chief Economist at RICS, Simon Rubinsohn, explains the findings: “A renewed acceleration in house price inflation allied to a fairly flat trend in sales activity highlights the very real challenge being presented by the housing market.
“More worrying still is the suspicion that the imbalance between supply and demand will lead to even stronger price gains over the next 12 months.
“This is also visible in the firmer pattern in the buyer enquiries series, which has now risen for four months in succession, reflecting, in part, a further modest easing in credit conditions.
“This trend could be brought to a halt when base rates do eventually begin to rise, but the dovish tone to the latest Bank of England inflation report suggests the first move will come a little later than previously thought likely, and that subsequent increases will be very gradual indeed.”1
Research by property search engine Home also indicates that the amount of homes for sale in England and Wales is 11% lower than this time last year and 39% lower than in August 2007.
It reports that in the southern regions, buyers only have half the choice that was available to them eight years ago.
Home reveals that prices have risen by 0.6% in England and Wales in the past month, and by 1.5% in London.