RICS makes prediction on house prices

Recently the Royal Institute of Chartered Surveyors has made some predictions with regards to house price movement in the UK. Read more

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Speculative property investors hit by oversupply

The oversupply of flats will have the biggest impact upon those “who have just gone in for the speculative investment” says an industry expert.

Landlordzone.co.uk has said that while established landlords who invest in property as a business could profit from falls in house prices, “the people who have gone into this more recently” will be the ones “who suffer”.

Tom Entwistle, editor of www.landlordzone.co.uk said: “The problem now is that because people [landlords] are desperate, they will lower their expectations of tenants, and will go for a lower quality of tenant.”

“That has a snowball effect because it means people will struggle to let and that could destroy the quality of the whole development,” he added.

Consumers invested in property thinking prices were going to continue rising but this has not happened, concluded Mr Entwistle.

His comments arrive after the Royal Institution of Chartered Surveyors reported that the demand for flats has fallen due to “an oversupply in the market”.

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House prices still rising

House prices have continued to accelerate, with the latest figures showing a rise for the 18th consecutive month.

The Royal Institute of Chartered Surveyors (Rics) has published housing market survey and it makes for bad reading for first-time buyers.

Statistics shows that new buyer enquiries fell for the fifth consecutive month in April and the decline is taking place at a faster rate.

Rics says that this is down to the latest round of interest rate rises which helped to make more homes unaffordable.

“Last week’s interest rate hike may not be the last as the housing market has not slowed as quickly as expected given the initial round of rate rises,” commented Ian Perry from Rics.

“With prices buoyant and conditions still tight, another rate rise later in the summer looks likely.”

Things look set to get worst for first-time buyers as the introduction of Home Information Packs (Hips) in June may force some sellers to take their properties of the market.

Currently, the housing market is benefiting from increased supply as people try to avoid having to fork out for a Hip and prices still continue to rise.

“The fear of paying the upfront buying costs of Hips has pushed more property onto the market,” said Mr Perry. “This will continue throughout May but conditions should tighten if Hips goes ahead on June 1st as sellers withdraw from the market.”

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More people renting

The number of people renting in the UK has soared in recent months as house prices continue to rise.

Figures from the Royal Institution of Chartered Surveyors (Rics) show that in the three months leading to January, demand for rented accommodation accelerated at its fastest pace for nine years.

Both flats and houses saw an increase in demand, with houses seeing the greatest change. Rics puts this down to increasing household incomes, which allow people to rent larger properties.

The organisation also points to strong economic activity, good employment conditions and a great deal of migration from eastern Europe as reasons behind the surge in rental applications.

However, it also highlights that concerns over affordability in the mortgage market have had an impact.

“With house prices still rising, the rental market will remain a ‘property purgatory’ for many would-be buyers unless accessibility and affordability conditions improve significantly,” said Jeremy Leaf from Rics.

“However, tenant demand will continue to rise as long as economic conditions remain strong.”

Many people find renting is a great way begin an independent life, however, it is worth considering how much you can afford to spend on rent if you plan on saving up for deposit.

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