The number of homes put up for both sale and rent fell again in January, leading to more affordability issues.
What’s the latest?
The housing market faces a ‘huge challenge’ as the shortage of stock continues to hurt both the lettings and sales sectors.
The number of homes put up for sale fell again in January, marking the 11th month in a row that listings have failed to increase.
At the same time, new instructions from landlords dropped for the fourth quarter running, with surveyors predicting the issue would get worse as more investors scaled down the size of their portfolio over the coming three years.
The Royal Institution of Chartered Surveyors (RICS) warned that the property shortage was putting upward pressure on both rents and house prices leading to increased affordability issues.
Why is this happening?
This situation has led to rapid house price growth, making it difficult for people to get on to or up the property ladder and causing transaction volumes to stagnate.
But the problem is now spreading to the rental sector as well due to a number of policy changes.
As a result, 28% more surveyors expect landlords to decrease, rather than increase, the size of their portfolios during the coming 12 months.
Above: three-bedroom home in Wellswood Park, Torquay.
Who does it affect?
The situation is bad news for most people in the property market.
Demand for homes to rent continued to climb in January which, combined with the shortage in supply, is pushing rents higher for tenants.
In fact, RICS estimates that during the next five years, rents will increase by more than an eye-watering 25%, significantly outpacing anticipated wage growth.
Aspiring first-time buyers and home movers will fare only slightly better, with house prices expected to rise by 20% in the same period.
The shortage of homes for sale also means they will have only a limited choice of properties and face acute competition from other buyers.
Sounds interesting. What’s the background?
The RICS survey comes after the Government published its housing White Paper setting out what steps would be taken to fix what it describes as the ‘broken housing market’.
At the heart of the housing problem is the fact that England alone needs an estimated 250,000 new homes each year to keep pace with rising demand, but less than 150,000 new properties are being built annually.
Simon Rubinsohn, RICS chief economist, said: “The scale of the challenge the Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey.
“Whether the measures announced can ease this trend remains to be seen.”
Top 3 takeaways
- The housing market faces a ‘huge challenge’ as a shortage of stock continues to hurt both the lettings and sales sectors.
- The number of homes put up for sale fell for the 11th month in a row in January.
- New instructions from landlords also declined for the fourth quarter running, with surveyors predicting the issue would get worse as more investors decreased the size of their portfolio over the coming three years.
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