Consequently, experts are predicting that UK house prices will rise by around 25% over the next five years becoming, according to a recent Royal Institution of Chartered Surveyors (RICS) Residential Market Survey, 'ever more unaffordable?, largely because of an acute shortage of homes for sale.
?While 34% more surveyors saw prices rise in May (the same month in which the Nationwide Building Society estimated that the average price of a home in the UK has now climbed to £195,000), supply to the market declined for the fourth consecutive month with 19% more surveyors reporting a drop in new instructions.?
RICS added that an anticipated post-general election 'supply bounce' had failed to materialise, with the north-west and London seeing the sharpest drop in instructions compared with April. The average stock of houses per surveyor now stands at 52, down by around 12% since the start of 2015. At the same time, new buyer inquiries increased at their fastest rate in more than a year. As a result, house prices rose again in May, and at a quicker pace than in April.
Buy-to-let landlords could be adding to the shortage as they rush to invest in the property market, but first-time buyers are increasingly being squeezed out by high prices, new by Connells Survey & Valuation research suggests.
The number buy-to-let mortgage valuations jumped 33% in the year to May, while first-time buyer valuations fell 4% over the same period, according to Connells Survey and Valuation.
May?s buy-to-let mortgage valuations by Connells were up 3% on April, while valuations for first-time buyers fell 2% over the month.
John Bagshaw, corporate services director of Connells Survey & Valuation, has said:
?Britain?s buy-to-let market is booming right now as would-be landlords are eager to enter the sector and current landlords look to expand.”
Several economists have already suggested that prices will start to rise again now that a majority Conservative government is in place. Earlier this month, Steven Bell, chief economist at City fund manager F&C Investments, said boom conditions had returned to the housing market.
Halifax?s housing economist, quoted in The Guardian newspaper, Martin Ellis, last week warned that housing supply 'remains extremely tight?.
?The imbalance between supply and demand is likely to continue to push up house prices over the coming months.' The Halifax and Nationwide building society both put the average price of a UK home at £195,000-£196,000.?
Simon Rubinsohn, chief economist at RICS, has said:
?There had been some hope that the removal of political uncertainty would encourage more properties on to the market, but the initial indications are that this is not proving to be the case. As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher, with property set to become ever more unaffordable.?
Rubinsohn thinks that the feedback RICS is receiving from its members 'points to prices at a headline level rising by another 25% over the next five years?. He said that suggested there was no real confidence among its members that effective measures to provide a major boost to new supply would be delivered by the government any time soon.
Christopher Green at Curzon Land in central London, which specialises in 'prime property investments?, told The Guardian newspaper that he was 'cheered by the election result?, telling RICS that 'the market has gained an immense amount of optimism now that the socialist spectre has been removed for the next five years?.
The bad news for tenants in the short term is that shortages also lead to rent rises with RICS members predicting rent increases averaging almost 3% over the next 12 months. RICS says this their survey reveals that rents will rise across all parts of the UK over the next three months, with expectations most acute in the East Midlands and the south-west.
But all of this, to some extent, dismisses the coming boost, especially to the supply of rental housing, resulting from a surge in institutional investment in the private rented sector (PRS), encouraged by the Government?s Build-to-Rent scheme.
According to the Financial Times, insurance and investment giant L&G announced its second deal in the sector last week, a 90-home, £16m scheme in Manchester. It is also building 300 homes for rent in Walthamstow, north London. L&G say they aim to invest £1bn into private rented housing in the coming years. See “Will the Big Boys Spoil the Buy to Let Party?
L&G is far from alone. Sigma Capital founded in 1996 and admitted to the AIM market in April 2000, with offices in Edinburgh, Manchester and London, is focused on residential development , in particular Private Rented Sector housing and large scale urban regeneration. Last week Sigma announced their plan to build up a portfolio of 10,000 UK homes, backed by sharia-compliant lender Gatehouse Bank.
Moda Living, a partnership between Caddick Group Plc and Generate Land Ltd, both with a history of successful developments, claim they are a market leading combination delivering purpose-built Private Rented Sector (PRS) accommodation on a large scale. Focusing on key cities across the UK, they currently have 2,750 units under control, and they are building a pipeline that?s set to exceed 5,000 units.
Moda claim that their developments are all high-specification, designed in line with the Urban Land Institute UK?s 'Best Practice Guide for Build to Rent' with the aim to set new benchmarks for the quality of their residents' experience in cities including Manchester, Liverpool, Leeds, Edinburgh, Bristol and Glasgow, while innovative micro-living specialist The Collective is building rooms for rent in London.
Article courtesy of LandlordZONE