Resi supply gap slows transactions

The latest RICS UK Residential Market Survey has highlighted the shortage of supply for both lettings and sales that is slowing the volume of transactions. In January, new landlord instructions in the lettings market dipped, a trend that has continued for a year. Respondents predicted that this issue would worsen over the medium term and indicated that they expected landlords to decrease the size of their portfolios over the next three years. Changes to stamp duty in April, alongside scheduled cuts to mortgage interest tax relief, were highlighted as factors diminishing the attractiveness of buy-to-let as an investment as 28% more respondents felt that landlords were likely to decrease the size of their portfolio over the next 12 months. Over the next three years, 26% more contributors expected landlords to scale back their portfolios. During the three months to January, tenant demand for rental properties continued to increase at the national level with the continued imbalance between supply and demand expected to squeeze rents higher. Over the next five years, rental projections point to a cumulative increase of just over 25%, outpacing house price inflation over this time period. New buyer enquiries were largely unchanged during January. New instructions, having remained flat for the past few months, deteriorated in January and have now failed to post a positive in reading in 11 consecutive months. Some 11% more chartered surveyors saw a fall in new instructions in January rather than a rise, leaving  average stock levels on agents’ books still close to historic lows. • To send feedback, e-mail david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette