The Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey for April 2021 has outlined that buyer demand is remaining firm, but the flow of new listings has lost momentum.
RICS found hat a net balance of +44% of contributors to the survey cited a pick-up in new buyer demand during April, in line with the previous month, which saw a reading of +43%.
Newly agreed sales also rose over the month, evidenced by a net balance of +34% of respondents noting an increase, but this was down month-on-month from +48%.
Looking ahead, a net balance of +23% of respondents said their near-term sales expectations were comfortably positive at the national level; over the next 12 months, this proportion cooled to just +12%.
The stock of new listings arriving on the market is insufficient to meet current demand, with the net balance of new instructions at -4% in the latest results, down from +21% previously.
The average number of properties on estate agents’ books now sits at just 40, having briefly stood at 46 back in December.
Spurred on by this buyer demand versus supply dynamic, RICS found that house price growth rose again over the month, with a net balance of +75% of respondents noting an increase in prices during April, up from +62% in March.
Respondents expected strong house price growth to be maintained over the next three months, while a net balance of +68% foresaw upwards pressures on prices remaining firm over the next 12 months.
In the lettings market, tenant demand growth accelerated markedly in the three months to April, registering a net balance of +60% across the UK as a whole.
This is up from a balance of +14% back in January, with the latest pick-up likely aided by the general improvement in the COVID situation, according to RICS.
Expectations for near-term rental growth also rose sharply, at +55% in April, compared to +15% over the previous quarter; over the next 12 months, respondents envisaged rents rising by 3% on average across the UK.
Sundeep Patel, director of sales at Together, said: “After a more cautious start to the year, the latest market activity survey paints a very different picture, with sellers enthusiastically listing their properties and buyer enquiries and sales activity indicating a continued uptick in buyer demand.
“Indeed, house price growth spiked again in April, with a net balance of +75% of surveyors reporting an increase in prices, up from +62% in March.
“That said, considering the end of the £500,000 taper for stamp duty next month, mortgage holidays winding up in July, and potential for international travel, we may see demand start to cool off and the market start to settle.
“As we begin to hopefully get a view of what life will look like past the peak of the pandemic, and a sense of ‘normality’ returns, more needs to be done to address the shortfall in property supply which continues to push up both house prices and rental fees.
“However, with the government’s new Planning Bill aiming to spark a surge in regional housebuilding, there may be increased opportunities for hopeful first-time buyers within the next few years.
“Specialist lenders can play a key role in supporting home-buyers’ property aspirations as we expect there to be more demand for flexibility post pandemic, to meet borrowers’ evolving circumstances.”
Nigel Purves, chief executive of Wayhome, added: “The momentum of the housing market continued to accelerate in April, with a solid uptick (+44%) in buyer enquiries.
“In addition, house price growth leapt ahead in April, with a net balance of +75% reporting a lift in prices, up from +62% in March.
“Demand for new homes continues to outpace supply, which has led to increased competition between buyers looking to make their next move.
“While the government incentives – including the stamp duty holiday and 95% mortgage guarantee – have boosted consumer confidence recently, there are still affordability concerns for a large proportion of aspiring homeowners.
“It’s positive to hear of the new proposal set out in the Queen’s speech, which will go some way towards tackling and modernising the UK’s planning systems and facilitating more new-builds within the next few years.
“However, what the industry should be focused on in the immediate term is ensuring people are not out-priced by the market and are able to access desirable homes through a wider range of affordable options.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “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.
“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 (LTV) mortgages are further underpinning activity and demonstrating to many that the government also has a vested interest in propping up house-price growth.”
Rich Horner, head of individual protection at MetLife, said: “Determined buyers will be eager to snap up the home of their dreams before the stamp duty deadline, putting to good use the pent-up savings that have been accumulated during lockdown.
“However, the fear of missing out has placed immense power in the hands of sellers, with many listings being sold at inflated prices that would have been inconceivable a year ago.
“But, the market knows that this level of activity and house price growth is not sustainable, it’s a question of when prices stabilise rather than if.
“Prospective homeowners should hold firm and keep a clear budget in mind. It’s easy to get caught up in the fast paced nature of the market but buying a home is a significant financial commitment.
“It is crucial that buyers look ahead and consider the protection they have in place to cover future mortgage payments, should their financial situation change.”