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Residential Property Review - October 2021

Supply still lagging demand

Steady buyer demand and a sixth successive month of net negative new instructions were the stand-out trends in the September UK Residential Market Survey published by the Royal Institution of Chartered Surveyors (RICS).

At the national level, new buyer enquiries had a net balance of zero in September, up from -13% in August. Meanwhile, the recent decline in new listings persisted, with new instructions registering a net balance of -35%.

Simon Rubinsohn, RICS Chief Economist, commented, “The imbalance between demand and supply remains the most striking theme… And feedback from members provides little reason to believe this issue will be resolved anytime soon.”

Following a slight dip caused by the tapering of the Stamp Duty holiday, steadier buyer demand is now causing sales expectations to gain momentum, with 11% more respondents anticipating an increase in sales in the coming three months, up from +6% in August.

Indeed, with over one million homes sold by the end of August – a threshold not usually passed until October – analysts are suggesting 2021 could see more transactions completed than in any year since the global financial crisis.

Rents surge nationwide

The rental market is springing back to life, with the return of renters to cities forcing rents higher, and the number of rental homes struggling to keep pace with the surge in tenant demand.

In London, the bounce back gathered pace in September, with quarterly average rental values rising by the largest amount in a decade in both prime central (+2.8%) and prime outer London (+2.6%). Prices are being driven by an imbalance between tenant demand and new available rental properties, as offices re-open and more overseas tenants start to arrive.

Meanwhile, rents outside London are rising at their fastest rate since 2008. The average price of renting a home outside the capital is now £790 a month, a 5% increase year-on-year. Two cities topped the rankings – Sheffield (7.6%) and Bristol (6.9%).

Transport links key for house hunters

The return of workers to the office after more than a year of home working has sparked a significant increase in interest for homes near commuter train stations.

Buyer searches have surged in commuter areas, according to Rightmove. Indeed, data from its website show eight of the top 10 stations that have seen heightened interest from potential homebuyers are all within one hour’s train commute from a major city.

Top of the list is Chelmsford station, which saw a 107% increase from June to August. In the same period, Crewe, just under an hour from Birmingham, saw a rise of 32%.

Rightmove’s Tim Bannister commented, “While the demand to relocate or search for more space has by no means gone away, the numbers suggest that this will need to be balanced with easy transport access on office days, which has understandably been lower on the agenda for many over the last eighteen months.”

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