A surge in house prices and the number of buyers and sellers, together with changes in the lettings market, has brought renewed optimism to the UK housing market.
The latest survey conducted by the Royal Institute for Chartered Surveyors (RICS) has detected a major boost for the housing market across the UK, making the future look rosy for the coming months.
Buyer enquiries peaked in January as consumers renewed property searches following the landslide general election victory and the resulting greater clarity regarding Brexit.
As new buyer enquiries increased to 23% from 19% the previous month, sales agreed also rose by 21%. The rise in properties listed for sale, with 19% of respondents reporting growth compared to 11% in December, has also contributed to the mood of optimism.
The index showed a boost in house price growth of 17% in January, the largest increase since May 2017.
Simon Rubinsohn, Chief Economist at RICS, commenting on the latest survey results, said they demonstrate a continuing improvement in confidence over the month, building on a perceptible recovery in the wake of the general election. Currently, he added, respondents are optimistic as to the propects for increased activity over the next twelve months.
Growing demand for rental homes
Demand in the rental sector increased steadily in the three months to January, with 24% of those surveyed recording a rise in this area. The number of people renting across the UK has risen in recent years, resulting in reduced levels of home ownership and increased demand for this type of property.
Nonetheless, there was also a reported 13% decrease in enquiries from landlords during the same period, which is expected to lead to a rise of just over 2% in rents over the next twelve months as more tenants enter the market and struggle to find available property.
Opportunities for landlords
Recent reports have indicated that landlords are considering leaving the market due to concern over the impact of potential changes to Section 21 (no-fault eviction) legislation. Despite this, new data released by Precise Mortgages shows that one in seven landlords intends to increase their property portfolio in the coming year, focusing more on the “hotspots”.
The North of England, in particular the Northwest, is the region where the greatest number of landlords plan to focus their future investments, according to the survey.
There is also evidence that tenants are staying in their rental homes for longer, which may explain why less housing is available currently. However, as demand increases relentlessly and tenants seek longer-term security, landlords can expect to profit from increased interest in their rental properties and fewer void periods.
More homes must be built
House building is a major issue in the UK’s ongoing housing crisis. There needs to be an increase in housing stock not only in the residential market but also the buy-to-let (BTL) sector.
Adrian Moloney, Sales Director of OneSavings Bank, commented that while there are positive signs of confidence returning to the market, aided by historically low interest rates and healthy competition in the five-year fixed BTL mortgage sector, there is still much to be done to return the housing market to full health.
As next month’s Budget approaches, he continued, buyers and sellers will expect the Government to give solid commitments to address the problem of diminishing housing stock.
House building, Moloney concluded, must be central to the Government’s plans to remedy the intractable problem of supply and demand and enable more people to climb onto the property ladder and then to trade up and down as necessary.