Respondents to the survey attributed the recent increase in demand to a rush of buy-to-let investors looking to buy before the 3% stamp duty surcharge comes into effect in April. 74% expect there to be an increase of purchases by buy-to-let investors prior to the changes.
Agreed sales have also risen over the month at the fastest pace since April 2014. Most areas have seen a rise in sales since the start of the year, with RICS expecting further increases.
Supply has also gathered pace in the past two months, but stock remains 21% down compared to a year ago. The increase was largely concentrated in London where a significant lift in properties coming to the market was recorded in January (a net balance of +58% more respondents noted an increase). Elsewhere, sales instructions across the UK were much flatter.
Even with an improvement in supply, the rush to acquire buy-to-let property is pushing prices up, with 49% more surveyors reporting prices to have risen in January.
Simon Rubinsohn, RICS Chief Economist, said:
"Our latest UK Residential Market Survey has seen a rise in new instructions in January, which, 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 intensifying despite a higher level of supply.
"How the tax changes planned for the buy-to-let sector over the next few years plays out remains to be seen, but there are concerns raised in the survey that 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 our key indicators point to further rent - as well as house price - increases."
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented:
“An increase in new property listings is a step in the right direction, but after more than a year of falling supply will do little to quell rising house prices. A radical step change is needed to boost construction of new homes and even out the current imbalance between supply and demand. Such changes cannot be achieved overnight, so for now rising property prices seem inevitable.
“The market should settle into a more regular rhythm once the stamp duty deadline has been and gone. However, the RICS survey indicates house prices will have a notable upward momentum over the next twelve months. This is troubling for first-time buyers, although recent Government policies have helped to improve the number of affordable housing options.”
Robert Grigg, Managing Director of Property Finance at Hampshire Trust Bank, added:
“Only through a concerted effort to increase housing stock can we fill the housing gap and begin to moderate prices. SME housebuilders are key and they need to look at different options for accessing financing and increasing Britain’s housing stock. This is exactly where challenger banks can step in, with a more personal and tailored approach to business banking we’re able to help them access finance that’s not available to them at the big banks. Britain’s SME house builders have an important role in helping solve Britain’s housing crisis and it’s important we give them the best possible chance to do this.”
