Friday, 05 March 2021

Demand and supply of homes remain strong

DEMAND for new properties and the flow of new homes being listed for sale across the UK’s housing market remained strong in October, according to a survey.

The Royal Institution of Chartered Surveyors says that those who responded to the survey expect the latest upturn in sales to continue for the rest of the year.

However, moving into next year, the outlook for sales remains subdued as respondents cite the withdrawal of government support measures and a difficult economic backdrop as a concern further ahead.

During October, the number of people looking to buy a new property increased at the headline level for the fifth consecutive month, with a net increase of 46 per cent of respondents citing an increase in new buyer enquiries.

In keeping with the rise in demand, the number of new properties being listed for sale also increased for the fifth successive report.

An increase of 32 per cent of respondents reported a rise in new instructions and is the longest run of growth seen in the RICS residential market survey since 2013.

The number of properties sitting on estate agents’ books remains relatively low in the historical context, but October saw average stock levels move up from 42 to 43 per branch.

As more properties are listed for sale and the
pent-up demand continues, the number of agreed sales continues to rise.

In October, an increase of 41 per cent of contributors saw a rise in transaction volumes, which remains well above the average reading of plus nine per cent over the past year.

As we look ahead, respondents remain positive about activity for the coming three months, with 17 per cent more contributors expecting sales to rise.

However, the outlook for the year ahead is more downbeat, as 27 per cent of respondents anticipate sales to weaken over the longer timeframe.

The impact of the recent increased sales activity continues to see house prices rise. That said, feedback to the latest survey suggests this rate of house price inflation could begin to moderate shortly, with three-month price growth expectations moderating from a net balance of plus 22 per cent in September to plus 13 per cent in October.

Meanwhile, the 12-month outlook points to a flatter trend to emerge at the national level.

RICS Chief Economist Simon Rubinsohn said: “The housing market remains very busy and despite the second national lockdown, the sense is that this will persist over the coming months and into the new year.

“However, there is understandably more caution about activity looking beyond the first quarter of 2021. Aside from the withdrawal of government incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come.

“That said, medium term expectations for house prices and private rents have barely been dented by covid-19, according to the latest survey. Indeed, the projections still point to increases likely to exceed wage growth highlighting the ongoing issue around affordability.”

The UK rental market continues to see a growth in tenant demand as the volume of landlord instructions declined at the national level. While expectations for rental growth over the near term remain positive for most parts of the country, London is the clear exception as a net balance of minus 55 per cent of respondents foresee rents declining over the coming three months.

Meanwhile, RICS is set to launch the new training programme in January 2021 to increase the number of professionals who will be required to complete future mandatory fire safety checks.

The course is projected to take up to eight weeks and is designed for chartered building and building control surveyors who already have a base knowledge to undertake external wall system assessments for low to medium risk residential buildings; increasing the number of professionals to support the current market demand.

Buildings that are more than 18m tall or those which require specialist testing will still require a qualified fire safety engineer to carry out the External Wall Fire Review form assessments.

The course will ensure professionals can: Identify and interpret effective information; undertake the inspection process; Assess an external wall system ; understand the fire risk presented by external wall materials; define the scope of work effectively; identify the legal framework and key standards affecting fire safety and legal liability and prepare a comprehensive report with recommendations.