Housing supply and rental sector | Commercial Trust Ltd.

Two new reports added to growing concerns that the lack of housing supply will continue to cause problems for some hopeful landlords in the new year.

We take a look at the data and what it might mean for owners in the future.

Housing supply

A new report from the Royal Institution of Chartered Surveyors (RICS) shows that the mismatch between housing supply and demand continued in November.

At the same time, data from the Equity Release Council shows that nearly half of homeowners under the age of 40 entered the real estate ladder “much later” than they expected.

What does this mean for owners in the coming year?

RICS report

RICS data is collected from a monthly residential market survey.

The most significant responses were a 13% net balance for new buyer inquiries, up from 11% in October.

At the same time, new listings fell by a net balance of -18%.

This combination ultimately saw 71% of participants report a price increase.

The report’s conclusion corroborates this: “A lack of stock therefore leads to competition between potential buyers, which translates into higher house prices”.

An imbalance between supply and demand is also evident in the rental market.

48% of those surveyed saw an increase in demand, while instructions from homeowners saw a decrease to a net balance of -24%.

This could imply that the lack of availability of properties is driving more people into renting and encouraging some owners to stay in the rental game instead of selling.

Rics Chief Economist commented:

“Unless this trend reverses soon, transaction levels could stagnate in 2022, with limited choice proving more important than any change in the interest rate environment for new buyers.

“The imbalance with the trend in demand is, on the other hand, likely to continue to be a key factor in supporting prices and, indeed, even if the cost of mortgage financing begins to rise, it is likely that House prices will continue to rise through the coming year, albeit at a somewhat slower pace than over the past twelve months.

The first buyers

If the imbalance in the real estate market is felt throughout the sector, it strongly affects those who are trying to take the first step in home ownership.

The Equity Release Council survey was conducted by the Censuswide data group among 5,000 nationally representative UK adults in May.

The results showed that nearly 45% of young homeowners with a mortgage delayed buying their first home, compared to 29% of homeowners over 40.

In addition, 43% of mortgage owners under the age of 40 relied on financial help from family or friends to buy their first home.

The data also showed a change in attitude towards mortgages and end of life, with 32% of homeowners with a mortgage unsure whether they will become ‘mortgage free’ before they retire, or already have it. excluded. 20% think that the idea of ​​retiring “without a mortgage” is unrealistic.

Jim Boyd, CEO of the Equity Release Council, said:

“The realities of deferred home ownership cause people to re-evaluate their attitude towards secured debt later in life.

“There are clear signs that paying a mortgage in retirement is no longer a taboo – for many people, it can mean the difference between struggling financially and enjoying a more comfortable lifestyle while supporting members. of the family.

“The ability to use real estate wealth to enhance your retirement experience is a choice that many homeowners have gained over the years of paying a mortgage and building an asset.

“Our results suggest that loan products later in life are likely to be even more important to future generations of retired homeowners than they are today.”

Owner’s Perspectives

While a competitive real estate market that continues into the New Year may not be in everyone’s favor, the news should be welcome for those concerned about tenant numbers.

With fewer vacancies across the country and increased rental demand, owner properties are in high demand and are expected to remain so for the foreseeable future.

And while the demand for properties may temporarily increase the cost of investing, it should be reassured that some tenants choose to delay property plans, which means they may need their rental properties for longer.

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