The UK residential market ‘lacked momentum’ in January, according to the latest RICS survey, with transaction volumes and enquiries relatively unchanged on December.
The surveyors report found that a shortage of supply was impacting on the lettings market, an issue it expects to worsen as landlords decrease their portfolios in the next three years.
Rents are expected to rise by just over 25 per cent in the medium-term while the value of property is expected to grow by below 20 per cent.
New buyer enquiries were more or less unchanged in January, with just 5 per cent of surveyors reporting an increase in demand.
Mortgage Advice Bureau head of lending Brian Murphy says: “RICS members are reporting an ongoing paucity of stock for sale in many areas, contrasted by new buyer demand remaining consistent, which is no doubt a major factor in property values around most of the UK maintaining their current momentum.
“It would appear many RICS members suggest this is a situation which is likely to continue, particularly given the current factors of changes to tax legislation and an increase in SDLT potentially having an impact on those landlords who would otherwise potentially be considering growing their portfolios to capitalise on growing tenant demand.“
Yorkshire Building Society chief economist Andrew McPhillip says:
“Reduced availability of housing stock should outweigh the effects of slowing demand, supporting house price growth in the short term.
“With house prices expected to continue to increase, the balance could eventually shift in favour of supply as more people are priced out of the market. This trend is likely to cause house price growth to slow as the market becomes less competitive. Additionally, an expected increase in inflation could exacerbate affordability issues and therefore housing demand as fewer people are likely to be able to save for a deposit.”