The number of new landlords instructing letting agents has dropped sharply - and with worse to come thanks to the coronavirus pandemic.
That is the view of the Royal Institution of Chartered Surveyors' (RICS) latest residential market survey, released this morning.
The research found that 32% more respondents reported a decline in new landlord instructions in March, compared with a month earlier, and it is widely expected that the poor number of new landlords is set to continue, perhaps at least until summer.
Simon Rubinsohn, RICS chief economist, said: “The results of the latest RICS survey capture the period during which the economy moved into lockdown so show a somewhat mixed picture.”
The lockdown has also seen the lowest near-term property sales expectations since 1998, whilst future expectations for house prices have also fallen dramatically.
The institution warns that despite the first few months of the year showing a marked pick-up in market activity, the sudden halt in March will have a significant impact on the outlook for the rest of the year.
Last month, after three successive months of increasing buyer enquiries, a net balance of -74% of UK respondents reported a fall in buyer demand – a sharp fall from +17% previously.
Unsurprisingly, March also saw newly agreed sales drop across all parts of the UK with 69% more respondents reporting a fall – down from 19% reporting an increase a month earlier.
Looking ahead, sales expectations for the next three months have also turned deeply negative following the lockdown measures, with a net balance of -92% of respondents representing the lowest reading since sales expectations were first recorded in the RICS Residential Market Survey. Looking forward to the next 12 months, respondents were slightly less negative, although 42% expected sales to fall further rather than rise.
Rubinsohn added: “Critically, the key forward looking indicators clearly reflect the emergency measures in place. The fact that responses are negative not just at the three but also the twelve month time horizon is significant in suggesting that the legacy of covid-19 could be such that any return to what might be described as ‘normality’ in the economy will take time and households will remain cautious for a while.
“Of course, the primary focus of government is at this stage the health of the nation and defeating coronavirus and it may be a little premature to be planning for the economic recovery. However, the feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”
RICS’ survey feedback suggests that the government will need to start considering medium and long-term measures that could assist a post-pandemic housing market.
Hew Edgar, RICS head of government relations, said: “While the UK’s health is the priority, our survey feedback suggests that the Government will need to start considering medium and long-term measures that could assist a post-pandemic housing market.
“These are exceptional circumstances and the Government will need to consider all avenues that could feasibly rebuild confidence, bridging the gap between uncertainty and recovery.
“RICS is not an organisation that would call for a stamp duty holiday on a whim, and indeed our view prior to Covid 19 was that it required a full-scale review. As we start to emerge from this crisis, however, it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off. For those who can afford to move they may lack confidence in the market, adding to the slow down. A stamp duty holiday could be one of the ways to reactivate the housing market quickly as a short term measure.”