Property market comes off the boil, but rentals still red hot
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the RICS Residential Market Survey, showing property market comes off the boil, but rentals still red hot.
Key points from publication:
- The number of new buyers coming to the market fell again and sales dropped. Meanwhile, the number of properties for sale remained flat.
- House price rises slowed, and more houses worth £1 million or more are starting to sell for less than the asking price.
- Agents expect the market to slow further over the coming year, and for prices to keep rising – but more slowly.
- Runaway rents continue, with demand up again and supply falling for the third consecutive month.
- Most agents think rents will keep rising over the next 12 months.
Sarah Coles says:
“The property market is coming off the boil, with demand falling again, supply flat, and sales slowing. A desperate lack of property available to buy is keeping prices rising, but the fire has gone out, so the latent heat in the market is cooling.
“Rising prices, the threat of higher interest rates, and now the uncertainty of the political landscape are finally taking a toll. The agent comments included some of the most negative predictions we have seen.
“The buyers are still there, but they’re increasingly cautious, and they’re keeping one eye on how bad things are going to get for them financially. As life gets tougher, more of them are pulling out of agreed sales and trying to negotiate a lower price.
“The lack of property for sale continues to drive prices higher overall, but the fall in demand is keeping a lid on it. It’s also making buyers more price-sensitive, so there’s more talk of overpriced properties going nowhere and sellers being forced to scale back their expectations. This is hitting particularly hard at the top of the market.
“Things could get even tougher as we go through the summer. GDP figures out yesterday came in above expectations, with the economy growing 0.5% in May. It has intensified speculation that not only will rates rise again in August, but they could be up 0.5 percentage points this time. And while existing owners are largely protected by fixed rate mortgages for now, new buyers are going to have to factor in higher borrowing costs. It may well be enough to blow a chill wind through the market, so any latent heat disappears even more quickly.”
Renting:
“The rental market remains red hot, and runaway rents continue to push costs up alarmingly for tenants. It’s yet another month when we’ve seen demand rise and supply fall, which is inflating rents alarmingly.
“Landlords are selling up, which is partly an effort to cash in on higher prices at the top of the market. However, overwhelmingly agents say they’re getting out of the business because of the increase in legislation. Several mentioned concerns about the white paper, published in mid-June, which is a vital step forward for tenants’ rights, but adds more responsibilities for landlords, and includes measures making it more difficult to raise rents. There’s a reasonable chance it could persuade even more to sell up.
“The legislation also makes it more difficult for landlords to end a tenancy. This is making them pickier about tenants, which means that anyone without a spotless rental record could find it increasingly difficult to find a home to rent at all. RICS is calling for the next Prime Minister to make life easier for landlords, in order to ensure enough of them remain in the business to keep a lid on rental costs.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay
