RICS Residential Survey
– New management instructions out pace the demand from tenants.
– Rents decrease for the first time since April 2003.
– Rental level expectations drop to the lowest level on record.
– Gross yields rise as house price falls outpace rental decreases.
Simply put, people can not get finance, a decent mortgage loan to value ratio is now 75%. Therefore the buyers are renting and the would be sellers, who who not want to sell at “fire sale” prices are renting their properties out.
New landlord instructions outpaced supply for the 2nd quarter in a row and the margin between demand and supply increased. The report states that “27% more surveyors reported a rise in new landlord instructions compared to a fall”. This was compared to 35% in July. So does that mean 63% of surveyors interviewees saw a fall in instructions? The report doesn’t say.
In addition the RICS report states that “56% more surveyors reported a rise in new landlord instructions than a fall… compared to 45% in July.”.
This increase in new lettings when compared to demand has led to rental levels to decline for the first time since 2003. However this was to be expected as rental levels have increased substantially over this period.
Gross yields are up! So if you have the money to buy a house, a big deposit, maybe it is time to start looking at the investment side of this phenonema. Rents are high and on a platue, or slightly decreasing, but house a is cheap in comparison. The yield has increased and when mortgage options free up there will be a rush to invest which will push house and flat prices up.
The report also states that “Landlords are holding their stock with only 0.5% selling their property at the end of a tenancy, the lowest (on the RICS record) since 2003.”
Interestingly, the only region where tenant demand fell outright was London with the strongest growth in new instructions in the Midlands and Wales.
Read the report here: http://www.rics.org/NR/rdonlyres/4D279D1B-6CF9-4802-8290-F7E14CE34E31/0/rls_1008.pdf