Survey in brief:
– UK house sales still lack momentum in January.
– Prices and rents continue to rise; shortage of stock is a key factor.
– Buy-to-let investment anticipated to decline given current policy landscape.

Lettings market

Landlord instructions

In January, new landlord instructions in the lettings market failed to improve for a fourth consecutive quarter across the UK. Moreover, 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 both seen as important 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 twelve months. Over the next three years, 26% more contributors expected landlords to scale-back their portfolios. It is, however, worth noting that the sentiment survey was obtained prior to the latest housing announcements.

Tenant demand

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. The exceptions to this pattern across the UK are to be found in London and Scotland where tenant demand is slipping back a little. Rent expectations essentially remain flat in Scotland, but are more downbeat in the capital.

Over the next five years, rental projections point to a cumulative increase of just over 25%, outpacing house price inflation over this time period (respondents anticipate prices will rise a little under 20% on the same basis).

Sales market

House purchases

New buyer enquiries were more or less unchanged during January, although, with only 5% of surveyors reporting an increase in demand, this is the lowest reading since August 2016. New instructions, having remained flat for the past few months, deteriorated in January and have now failed to post a positive reading in eleven consecutive months. 11% more chartered surveyors saw a fall in new instructions in January rather than a rise, leaving average stock levels on agent’s books still close to historic lows.


At the same time, sales were flat for the second month in succession with 1% more chartered surveyors seeing a fall in sales over the month. This headline reading does mask regional variation with the sales balance rising firmly in the South West while at the other end of the scale, it declined in central London.

Sales are however predicted to improve in the near term with 15% more respondents expecting a rise over the next three months nationally. What’s more the balance of respondents predicting that sales will increase over the year to come reached a one-year high (+37 net balance).

Price balance

Meanwhile, 25% more respondents saw a rise in prices, rather than fall in January, as prices tick back up. Looking across the UK, the past price balance deteriorated slightly in central London for the second straight report and has now been in negative territory for eleven consecutive months. Most other parts of the UK continue to see prices rise, with the North West returning the highest net balance for a third survey running.

Prices are expected to continue to rise over both the next three and twelve months across the UK in all regions except central London.

Main findings in Northern Ireland

Buyer interest remains strong and houses are selling, but the supply of new properties coming onto the market continues to fall. Indeed, new instructions to sell were broadly flat for the second month in a row.

In terms of prices, these continued to move upwards in January and the expectation is that this trend will continue in the three months ahead. Surveyors also anticipate that sales activity will edge upwards in the short term, despite supply constraints.

“The Northern Ireland housing market appears to have begun 2017 much as it ended 2016, with prices edging upwards and with reasonable demand evident. However, supply remains a challenge, with no sign of the number of properties coming onto the market picking up. Surveyors expect transaction activity to hold up in the short-term, but unless supply improves, this won’t be sustained. It remains to be seen if sellers are holding off until the spring months before marketing their properties.

We enter 2017 with the anticipation of growth in both prices and transactions. Our own expectation at Ulster Bank is for strong mortgage demand, with the ongoing very low interest rate environment and peoples’ desire to own their own home.”

Sean Murphy, Managing Director, Branch Banking at Ulster Bank


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