Simon Rubinsohn, Chief Economist at the RICS, reports that uncertainty in the run up to the General election saw new instructions fall and house prices rise in all parts of the UK during April.
Decline in Supply
With data showing a third consecutive month’s decline in the overall supply of houses for sale, house prices were once again driven during April. New instructions fell at their fastest rate since May 2009, according to the latest RICS UK Residential Market Survey.
33% more surveyors – the highest reading since last summer – saw prices rise in April. At the same time new instructions slipped to a net balance of -21% – the eighth consecutive drop in the last nine months. Furthermore, the flow of second hand stock onto the market dropped in most parts of the country.
The shift in tone in the London market, where 28% more respondents saw prices rise (compared with 6% more surveyors in March who saw house prices fall), also saw survey respondents reporting an increase in prices in every area of the UK for the first time since August 2014,
Prices & Rents Expected to Rise Further
72% of Chartered Surveying firms expect prices to rise over the course of the next twelve months, although in the short term these are expected to be relatively modest. Meanwhile, in the lettings sector, there is no slowing in the growth of tenant demand, which is helping to underpin higher expectations for rents.
Affordability Still Hitting Home Ownership
While anecdotally these trends may reflect election uncertainty, they are also indicate deeper underlying problems. The downward trend in owner-occupation rates across the country is a visible sign that affordability constraints bite ever deeper, as does the squeeze on household budgets from higher rents.
Even if the outcome to the election encourages a pick-up in instructions to agents it is doubtful that any related easing on upward price pressure will do more than provide temporary relief. The RICS sees it as absolutely critical that the new government focuses on measures to boost the flow of new build.
RICS sees housing as a “National Emergency”
The affordability and availability of homes in the UK is now a national emergency and addressing this crisis must be the priority for the new government. The last time we were building 300,000 homes was in 1963 under Harold Macmillan’s Conservative government, which utilised both public and private building.
We need a coherent and coordinated house building strategy across all tenures. This should include measures that will kick-start a supply-side revolution, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions.
RICS Warning on “Right to Buy”
Introducing demand-side measures such as extending Right to Buy will not see the Conservatives deliver on their promise of 1m homes by 2020.
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