House prices continue to rise in South West
New buyer enquiries across the South West rose for the eleventh month in succession in January according to the RICS UK Residential Market Survey, January 2016, with 40% more respondents seeing an increase in new buyer demand rather than a fall.
Feedback to the survey continues to suggest that demand is being boosted by a rush of buy-to-let investors looking to buy before the 3% stamp duty surcharge comes into effect in April. In the South West 96% of respondents said they did expect an increase of purchases by buy-to-let investors prior to the changes.
The South West has also seen a rise in sales since the start of the year – 43% of respondents experienced a rise in sales rather than a fall while further increases are expected over the year ahead.
Meanwhile stock levels in the South West are low with surveyors having an average of 46 properties on their books (compared to 55 properties this time last year). Welsh estate agents average 100 properties per branch.
Supply has increased across the UK but in the South West it remained static in January. This compared to a significant lift in properties coming onto the market in London with 58% of surveyors in the capital seeing an increase in new listings rather than a decrease.
However, the rush to acquire buy-to-let property is pushing prices up with 57% more surveyors reporting prices to have risen in January. Looking ahead, South West house prices are projected to rise further over the next twelve months with 60% more contributors expecting prices to increase rather than fall.
In the lettings market, tenant demand in the South West continued to increase during the three months to January with 41% of respondents seeing a rise in interest from prospective tenants. At the same time, landlord instructions fell with 28% more respondents seeing a decrease in supply of rental property. As a result, expectations point to continued increase in rents at twelve month and five year time horizons.
RICS Chief Economist, Simon Rubinsohn, said, “The rise in new instructions in January, although modest, is very welcome. However with buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near term pressure on prices is if anything intensifying despite a higher level of supply.
“How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite. Against this backdrop, it is perhaps not surprising that the key RICS indicators points to further rent (as well as house price) increases.”
