Global Alpha, LLP

10/12/2021

UK housing supply drought holding back market
House price inflation has remained consistently strong during the past four months, according to RICS. Photo: Getty
The UK housing market is going through a drought, with new listings falling further in November, according to the latest residential market survey from the Royal Institute of Chartered Surveyors (RICS).

The decline in fresh properties coming to market is holding back activity, despite new buyer enquiries rising by 13% in November, and agreed sales were down by 9%.

Respondents noted a decline in new listings for the eighth month in a row. Additionally, the volume of home appraisals in November was 20% lower than the same month last year.

The lack of available housing stock on the market is driving competition amongst would-be buyers, causing house prices to continue to rise.

The average UK property price reached a new record high of £272,992 ($362,708) in November, according to Halifax’s recent house price index.

House price inflation has remained consistently strong during the past four months, according to RICS.

Leading the way, Wales, the North West of England and the West Midlands all displayed particularly strong house price growth.

Regional breakdown of house prices over the last three months. Chart: RICS
Regional breakdown of house prices over the last three months. Chart: RICS
Even though house price growth in London appears to be lagging the rest of the country to a certain degree, the latest net balance of 51% is still well above the long run average of 12% in the capital, according to RICS.

Two thirds (66%) of respondents said they expect house prices to continue to rise over the next year.

November saw another monthly rise in tenant demand in the lettings market. Rents are forecast to increase "firmly" over the near term due to the imbalance between rising demand and dwindling supply.

Rents are expected to rise by 4% across the UK for the next year, with rental growth averaging roughly 5% per year for the next five years, according to respondents to the RICS survey.

“The issue of supply is gathering ever more importance in the feedback to the RICS Residential Market survey. Critically, the theme runs strongly both through the latest set of contributor comments as well as the data around new instructions and the decline in inventory on agents books," said Simon Rubinsohn, RICS chief economist.

08/10/2020

Rents across London have fallen by an average of 2.8%* so far this year and many tenants took advantage of the situation in September to move into somewhere larger or that offered better value for money.

With more tenants choosing to move, the number of available rental properties on the market fell by 12% in September and we expect availability to continue reducing this month.

Chestertons

14/04/2020

04/03/2019

02/07/2012

A single supervisor of the banking system
was agreed on Thursday night as a precondition for the funding of banks via the European Stability Mechanism (ESM). It is impressive how fast European leaders agreed to cede power over their banks to Frankfurt. We expected
much more debate on this topic given the importance of the banks as lenders to national economies and their past importance as taxpayers.

EU leaders agreed a roadmap for a “genuine economic and monetary union” which encompasses “coordination, joint decision making, greater enforcement and
consummate steps towards common debt issuance”.

Spanish, Italian and Irish government bonds greeted the news of the bank recapitalisation outside national budgets with massive gains on Friday. The market now awaits clarification from the ECB of the
timetable, and also from the ESM on how to finance the bank recapitalisation. As long as these questions remain unanswered, markets are likely to remain tentative and directionless.