The latest report from the Royal Institute of Chartered Surveyors (RICS) points to a continuing decline in the number of properties coming on to the housing market. Have you noticed a lack of supply?
According to the figures, housing supply saw its fifth monthly fall in a row in May and in London, where concerns of an overheating market were particularly strong, demand for new residential property dropped for the first time since June 2012. The data suggests that the lending restrictions that took effect under new mortgage market rules are starting to influence developments in the market, having a direct impact on the number of loan approvals as a result, the RICS commented.
Respondents to RICS’ survey also indicated that banks are tightening lending rules as well, which resulted in a decline in the loan to value ratio to 8.53% in May from 86% in April. The more difficult access to mortgage loans even led to a slight increase in demand for rents, where prices are now forecast to improve by about 2.5% in the next 12 months, delivering annual growth of 4% over the next five years.
The changing housing market environment also prompted a drop in respondents’ expectations for house values over the next 12 months, from 3.9% to 3.6%. This was the lowest level recorded since December 2013.
These are clear signs that the country’s housing market is finally starting to cool, RICS’ chief economist Simon Rubinsohn commented. The shrinking inventory, higher prices and more stringent lending rules are all factors making both sellers and buyers extremely cautious to make transactions, he said.
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