Latest RICS Residential Market Survey Published
The Residential Market Survey published by the Royal Institute of Chartered Surveyors (RICS) always gives us an in-depth picture of the state of the residential sales and lettings market. It’s often used by the Bank of England as an indicator of sentiment within the market, so we can take the Survey as a useful tool for measuring conditions across the UK.
The RICS have recently published the Market Survey for June. The data has been much anticipated, given that it covers the period that immediately follows the May election. In short, the Survey shows house prices rising considerably across the month of June, with still too few homes becoming available for buyers.
The political stability that has followed the Conservative victory, then, has not quite been as beneficial to the market as it might have been. Prior to the election we were expecting some sort of coalition agreement, perhaps with Labour and the Liberals in a power-sharing agreement. And that might have meant the Mansion Tax being given serious consideration by the governing parties.
With the Conservative win we’ve been saved the period of uncertainty, the deals and compromises that come with coalitions. And yet the housing market hasn’t quite responded as well as observers and analysts were hoping.
Prices increased in June to an eleven-month high, with 41 per cent more surveyors expecting prices to rise further over the next three months. This represents the highest net figure since April 2014. Moreover, 36 per cent more surveyors also stated that they expected house sales to rise over the next three months despite recent months having seen a flat-lining level of new sales agreements.
The hope following the election was that sellers who had previously held back on placing their property on the market would now take their chance. But the average stock of homes per surveyor fell in June to record lows, despite buyer demand rising for the second month in a row. The average stock of homes for each surveyor now stands at lows unseen since records began in 1978.
The rising buyer interest comes following a drop in mortgage rates and a strengthening labour market. The West Midlands and London were the regions seeing the strongest demand in June. And yet without the housing stock being released or built there remains a major imbalance in the market, hence the shift in prices upwards.
A similar imbalance persists in the rental sector, too, and it’s a point particularly stressed by the RICS. The Private Rental Sector (PRS) now comprises 36 per cent of the market, or 8.3 million households, with rental price rises expected to far exceed wage growth in the medium term.
That will impact especially heavily on the young professional workforce that traditionally relies on the PRS. The problem comes as the economic recovery also depends on this group to spend heavily on other forms of goods. With rents taking up more of their cash, the worry is they will have less left over to boost other sections of the economy.