House prices jumped sharply again in April as a slowdown in the number of homes coming up for sale continued to hit the market.
Estate agents are lapping up strong sales and a spike in buyer interest, but new listings remain woefully low, the Royal Institute of Chartered Surveyors said.
Chris Stonock, an estate agent and surveyor at Your Move in County Durham and Tyne and Wear, said he had seen another record breaking month for sales in April, adding that ‘demand continues to outstrip supply and stock levels are tumbling.’
On Tuesday, the Queen’s Speech touched referenced Government plans to ease planning rules to help alleviate Britain’s housing crisis by building more homes.
But there are mounting concerns about the sort of homes this could result in.
Prices: A Rics chart showing what’s been happening to national average property prices
Problematic: A chart showing average stock levels on estate agents’ books over the years
Simon Rubinsohn, chief economist at the Rics, said: ‘Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey.’
He added: ‘While it may be simplistic to assume that higher numbers alone can redress the affordability issue, particularly in a low interest rate environment, an uplift in delivery does have a role to play.
‘Planning reforms as outlined in The Queen’s Speech are likely to provide part of the answer although it is critical, particularly with regard to permitted development rights, that quality and safety are not compromised.
‘Ensuring a broad range of tenures in the delivery pipeline is also important, with anecdotal evidence from the survey emphasising a severe lack of stock in the private rental market as likely to drive up rents sharply over the next year.’
What’s been happening in the market?
Fresh survey results from the Rics suggest demand from buyers stayed high in nearly every part of the country in April, while the number of properties coming up for sale fell.
The Rics summed up the outcome of this imbalance, saying: ‘Respondents to the survey frequently highlight this mismatch between supply and demand to be a critical factor in driving up house prices, with growth reportedly accelerating further across all parts of the UK.’
Predictions: A Rics chart showing national property price predictions
Sales: A Rics chart showing property sales levels since the year 2000
Queries: A Rics chart showing levels of new enquiries coming in from prospective buyers
The net balance for new instructions fell to -4 per cent in the latest results, down from +21 per cent previously.
In reality, this means the average number of properties on estate agents’ books stands at just 40, having briefly stood at a recent high of 46 back in December.
Newly-agreed sales rose again over the past month, though in some cases at a slower pace than March.
Estate agents are upbeat about the sales outlook for the next few months, but thinks levels will cool further ahead.
Three-quarters of estate agents reported an upturn in house prices over the past four weeks.
‘All UK regions/countries are now seeing a sharp pick-up in house price inflation’, the Rics said.
Looking ahead, the estate agents surveyed said they expected to continue to see prices rise further over the coming months.
The Rics added: ‘Further ahead, respondents also foresee upwards pressures on prices remaining firm at the twelve month time horizon, with the latest net balance standing at +68 per cent’.
What about the lettings market?
Tenant demand ‘accelerated markedly’ in the three months to April, according to the Rics.
It thinks the easing of lockdown restrictions and ‘general improvement in the Covid situation’ has helped bolster demand among prospective tenants.
On the up: Demand among prospective tenants has increased in the past month, the Rics said
As with the sales market, a shortage in the number of homes being listed as to let is also a problem. New landlord instructions were more or less ‘stagnant’ over the past month, the Rics said.
In terms of the outlook for rental prices, the Rics said: ‘Over the next twelve months, respondents envisage rents rising by 3 per cent on average across the UK.
‘Although near term expectations remain marginally negative across London, the twelve month view on rents moved slightly into positive territory for the first time since early 2020.’
Planning law shake-up
The Queen’s Speech on Tuesday touched on a bill to ease planning controls and increase housebuilding across England.
The Planning Bill, according to the Government, aims to stop local opponents blocking development in designated ‘growth zones.’
Ministers said the plan would make it easier to hit house-building targets, but critics claimed it would sideline locals, with one rural charity warning of a ‘free for all for development.’
Radical change: The Queen’s Speech on Tuesday touched on a bill to ease planning controls and increase housebuilding across England
Former Prime Minister Theresa May says the plans would ‘reduce local democracy’ and lead to ‘the wrong homes being built in the wrong places.’
Mrs May said planning rules were not the main drag on house building, with many approved schemes yet to be built.
She said: ‘This is less, I fear, about modernisation than about giving developers greater freedom.’
It is thought the bill will be brought forward in Parliament in the autumn.
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