RICS: Property drought pushes up house prices and rent

Sarah Coles, private finance analyst at Hargreaves Lansdown, comments on September’s RICS Residential Market Survey, showing that property drought is pushing up house prices and rent.

Sarah Coles comments:

“A property drought is forcing up house prices, and rents, leaving house-hunters and renters out in the cold.

“The number of properties up for sale continued to fall in September, and the number of appraisals was down too. Sellers can’t see anything on the market to buy, so don’t want to sell, creating a vicious circle that is causing a property drought. This is the sixth successive month of fewer properties coming to the market, so house-hunters have nowhere to go, and sales are falling. One agent said that if we continue on this path, we won’t have a sales market at all by the spring.

“Popular properties are still creating bidding wars, which is pushing prices up, but not at the rate of the peak this spring, and the agents say some of the panic buying has come out of the market. It means buyers have the worst of all worlds, because they can’t find a property they want to live in, and if they settle for second-best, they’ll have to pay through the nose for it.“

Rental

“Tenants have an even bigger problem. The number of renters is still rising, as people reassess their living arrangements after 18 months of intermittent lockdowns. Some are looking for a place of their own, while others are hunting for more space to work from home.

“At the same time, the number of rental properties continues to drop. It has now fallen for 14 months straight. Some landlords have decided to cash in on higher property prices, while others have moved to holiday lettings to benefit from the rise in people holidaying in the UK. The rental drought means more tenants are staying in their current properties, which is adding to the shortage of homes up for rent.

“This is pushing rents up – and RICS expects rents outside London to rise 3% in a year and within London they’ll be up 2%. In some areas, rises are eye-watering, with one agent in the North East saying the rent on average homes is up as much as 30%.

“Rent already soaks up over a third of the income of renters, and with their budgets being squeezed from all sides, they can ill-afford a rent hike. It’s also making it nigh-on impossible to find somewhere to rent in some areas, so unless you have a perfect credit record and excellent references, finding somewhere to live is a nightmare.”

Kindly shared by Hargreaves Lansdown

Main photo courtesy of Pixabay