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Agents report strong buyer demand but dwindling supply, says RICS

Latest housing report for April predicts supply/demand imbalance will soon see significant price rises feed through.

Nigel Lewis

rics

Only a few months ago RICS housing market reports made for sombre reading but it’s latest is a different affair, revealing continuing strong buyer demand.

A net balance of 44% of agents canvassed by RICS said they had seen buyer demand pick up during April, an increase compared to March.

But the trade body says a lack of fresh sales listings coming onto the market is now presenting agents with significant problems as demand increasingly outstrips supply.

This was the biggest concern cited by agents, with many saying supply was not nearly enough to match the interest shown by potential buyers.

New instructions from owners looking to sell reduced significantly, with the latest net balance of -4%, marking a steep decrease from +21% in March.

A large proportion of agents told RICS they had seen, or were expecting significant house price rises as these supply persist, although they expect the market to cool off once the stamp duty deadline tapers off and the furlough scheme ends.

Rental supply

It also reports that a similar drought of rental properties entering the market is causing comparable problems for letting agents This includes a ‘severe’ shortage in PRS stock which is likely to drive up rents last this year.

Simon Rubinsohn (pictured), RICS Chief Economist, says: “Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey.

“While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low interest rate environment, an uplift in delivery does have a role to play.”

North London agent Jeremy Leaf (pictured), who is a former RICS residential chairman, says: “On our streets, we’re also finding that demand for houses more suited to buyers’ new working arrangements is maintaining upward pressure on prices. Listings are increasing but not fast enough to keep up with that demand.

leaf“Sales agreed are rising and fall-through rates dropping as the 30 June deadline for stamp duty tapering looms ever larger on the horizon.

“Economic recovery, low interest rates, faster vaccine rollout and unexpected lockdown savings, are giving confidence that prices may soften at worst at some point, rather than correct significantly.

“The new high loan-to-value mortgages are further underpinning activity and demonstrating to many that the government also has a vested interest in propping up house-price growth.”

May 13, 2021

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