Housing market confidence starts to ebb as Election draws closer
According to the latest RICS market survey, demand is continuing to significantly outstrip supply in the private rented sector creating a huge mismatch and leaving renters with rising living costs.
Confidence in the UK’s housing market is gradually decreasing despite the flurry of positive news during the second quarter of the year, the latest residential market survey from the Royal Institution of Chartered Surveyors (RICS) reveals.
Demand is continuing to significantly outstrip supply in the private rented sector creating a huge mismatch and leaving renters with rising living costs and plummeting affordability levels.
PUSHING UP RENTS
Tenant demand rose to +35% (net balance), up from +10% in May while new landlord instructions were flat which will continue to push up rents for the foreseeable future.
Meanwhile fading hopes of a cut in interest rates the continuing cost of living crisis has led to a small drop in new buyer demand, with a -8% (net balance) result recorded nationally compared to the flat picture reported in April.
While house prices fell slightly in May, regionally Scotland and Northern Ireland saw house prices continue upwards.

Justin Young, RICS Chief Executive, says: “Today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos.
“While both the Conservatives and Labour have staked their claims as being the party of home ownership, for that to be the case, greater attention must be paid to improving conditions for Generation Rent.
“This particular demographic – typically made up of people aged between 18 and 40 – has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.”
LONGER TERM
He adds: “The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation.
“With higher interest rates continuing to hamper first-time buyers, politicians are looking to win support from this group of buyers –as the Conservatives have done with Help to Buy 2.0 and Labour with the Freedom to Buy promise.”

Tom Bill, Head of UK Residential Research at Knight Frank, says: “Political uncertainty and fading hopes of a summer rate cut mean demand for UK housing has fallen in recent weeks.
“The ditching of the Renters (Reform) Bill ahead of the Election means landlords face an even longer period of limbo.
“The scrapping of no-fault evictions is likely to be proposed whoever wins power but there is otherwise a high degree of uncertainty about what could be implemented. Rents have risen as landlords leave the sector, meaning tenants have paid the price.”
REGIONAL REACTION

Kirby O’Connor, Director, GOC Estate Agents in Belfast, says: “The sales market has continued to go from strength to strength. “Incredible prices and supply outstretches demand especially in period homes.”
Mark Wood, Head of Acquisition at Blues Property in Cambridge, adds: “Good properties in good locations generate interest, although you need to be flexible on price. Properties in poorer locations are struggling to generate interest even with sensible pricing.”

Mark Lewis, Senior Partner at Symonds & Sampson, in Dorchester, says: “Buyers are cautious and even those who are ‘cash’ appear discombobulated by world events and the impending election even if they turn away from the news. There is more activity but we often have only one or two people competing at auction. Buyers are easily spooked by the smallest problems.”

Jeremy Leaf, former RICS chief and North London agent, says: “Market appraisals and sales listings picked up this month as buyers and sellers gained confidence in the expected southerly direction of travel for inflation and interest rates.
“However, buyers still hold sway so only competitively-priced homes are attracting most attention.”