RICS: 11 months of falling demand puts squeeze on sellers
- Buyer demand fell again – for the eleventh consecutive month. The number of agreed sales and new properties coming to the market were also down.
- House prices fell, and agents expect them to trend lower over the next 12 months.
- Falls varied across the country – with notable drops in East Anglia, the South East, the West Midlands and London.
- Agents expect house sales to pick up in the coming year – the first time they have felt this way for a year.
- The number of tenants continues to grow, while landlords keep leaving the market. Rents are expected to rise 4% in the coming year.
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Sellers can’t afford to get carried away. Things may not be as grim as we’d feared six months ago, but buyer demand has been dropping for the best part of a year, so if you’re going to sell, you need to enter the market with clear-eyed pragmatism.
There are so few properties coming to market that agents are over-valuing in order to win the business. Homes then sit on the market without interest or viewings, forcing sellers to drop the price. It’s why Zoopla says discounts are currently averaging 4%. Right now, overpriced properties won’t just lose the initial flurry of interest when they first go up for sale, they also risk missing the Spring selling season, which could force more price drops when the market slows down. Agents stress that with buyers thin on the ground, and sales sluggish, only the right properties at the right price are shifting.
For those keen to look closely for any signs of optimism, the one piece of good news is that expectations of falling interest rates later in the year have persuaded agents that we could see sales pick up again within the next 12 months – which is the first time in over a year they’ve felt this positive about the future. However, it’s the one bright spot in a really tricky market for sellers. It’s why, on balance, it’s difficult to see the market avoid more price drops in the coming months.
Rental trap
For those trapped in the rental market, life is getting even harder. Yet another month of growing demand and fewer properties to rent means rents are rising, and even those with enough cash to rent are struggling to find a home. One agent described the market as ‘frenzied’.
They blame increased legislation – including energy efficiency requirements – which are persuading landlords to sell up. They also say some buy-to-let landlords are struggling to make the maths add up now that mortgage rates have risen. Meanwhile, some areas are seeing more landlords switch to more profitable Airbnbs.
As it gets harder for people to stretch their finances and get onto the property ladder, the number of tenants continues to grow. The end of the Help to Buy equity loan scheme hasn’t made life any easier either. The fact that rents are on the up means it’s only going to get more difficult for tenants to save for a deposit, so it’s worth taking advantage of all the help you can get – whether that’s support from family or the 25% government bonus when you save for your first home in a Lifetime ISA.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay
