Latest RICS residential survey paints gloomy picture

New listings of homes for sale have declined to their lowest level for nearly three years, according to the RICS.

The lack of new homes coming onto the market was limiting choice for buyers, leading to a fall in activity, the surveyors’ body said in its April residential survey.

Headline indicators on demand, supply and prices remained “downbeat”, while Brexit uncertainty remained a “constraint”, with little momentum foreseeable in the short term, although expectations further out were “slightly more positive”.

The RICS said its national house price net balance remained unchanged in April at -23%. Prices were rising in Northern Ireland and Scotland but had been falling in the South-west for the past six months. Prices were still under pressure in London and the South-east, it added.

In the lettings market, tenant demand continued to climb, albeit slowly, while landlord instructions continued to fall, extending a run of successive quarterly declines dating back to the middle of 2016.

The RICS said respondents to its survey had noted the lettings fee ban and proposed changes to section 21 – which currently allows landlords to evict tenants with two months’ notice – could lead to more landlords exiting the market.

It argued that while tenants “should not be evicted on a whim” the rules should still allow for landlords “to easily evict troublesome tenants”.

Last month the government announced that private landlords will no longer be able to evict tenants from their homes “at short notice and without good reason”.

Communities secreatary James Brokenshire said that in abolishing these kinds of evictions, “every single person living in the private rented sector will be empowered to make the right housing choice for themselves, not have it made for them.

“And this will be balanced by ensuring responsible landlords can get their property back where they have proper reason to do so.”

But Richard Lambert, chief executive of the National Landlords Association, said the changes being proposed by the government “make the ‘fixed term’ meaningless, and so creates a new system of indefinite tenancies by the back door”.

Speaking about the latest survey findings Simon Rubinsohn, the RICS’ chief economist, said while the new build sector was “generally performing more strongly than the existing market, the challenging narrative around housing is likely to have some impact on the delivery pipeline, making it harder to meet the ambitions for supply the government has set itself”.

Ministers have regularly spoken of their goal of building 300,000 homes a year by the mid-2020s.