Demand for residential properties unsurprisingly fell in April following the introduction of higher stamp duty for buy-to-let and second home buyers, but house and rent price rises remain on the horizon due a chronic lack of homes on the market, according to the Royal Institution of Chartered Surveyors (RICS).
In April, 22% more chartered surveyors reported the first fall in new buyer enquiries since March 2015, as would-be purchasers came to terms with the tax changes.
Surveyors polled do not expect the level of property sales to improve in the coming months due to short-term uncertainty over the EU referendum, with the housing market in London set to be hit the hardest.
Nevertheless, 61% more of those surveyed said that property prices would increase rather than drop over the next 12 months in England and Wales. In the next five years, contributors to the survey forecast growth of between 3% and 5.5% per year.
Simon Rubinsohn (pictured), the chief economist at RICS, said: “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data.
“More ominous is the expectation that both prices and rents will head materially higher over medium term despite existing affordability concerns, with the supply pipeline continuing to fall short of household growth - notwithstanding the various levers the government is pulling to try and drive development.”
The report from RICS will provide some comfort to landlords that “buy-to-let is still an attractive asset class”, according to Brian Murphy, head of lending at Mortgage Advice Bureau.
Earlier this week, LSL Property Services reported that a typical home in England and Wales is now worth £24,280 more than a year ago, with property prices rising by 8.9% since April 2015 – meaning that they now stand at close to £300,000.
Adrian Gill (below), director of Your Move and Reeds Rains estate agents, which are owned by LSL, commented: “Homeowners have been basking in the spring sunshine this April, on the back of the fastest year-on-year growth in property prices since December 2014.
“This acceleration in home values comes when many had expected house prices to dip due to a natural decline in demand from buy-to-let and second home buyers. However, after an exceptional March, there is now a severe shortage of properties on the market, with fierce competition between buyers for each available property.”
Property price growth in London surpassed all other regions in England and Wales in both value and percentage terms, with the average price of a home in the capital rising by almost £60,000 over the past 12 months to an average of £600,625, according to LSL’s figures, based on analysis of Land Registry data.
Gill added: “London has led the way this April, with the value of the average home in the capital breaking through the £600,000 barrier for the first time. Property prices in London have seen an 11% upswing year-on-year, surpassing all other regions. This rapid growth means the average house price in London has almost doubled over the past seven years, rocketing up from £321,917 in April 2009.”