0:01 AM, 10th October 2024, About 3 hours ago
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Tenant demand continues to soar as house prices rise for the first time in two years, according to the latest RICS residential survey for September.
The organisation warns that many landlords are rushing to sell their properties ahead of the rumoured capital gains tax increase expected in the October budget.
Despite the lettings market facing trouble with demand and supply, the residential market looks positive after a decline.
According to the RICS survey, tenant demand jumped by 22% in September. However, properties available for rent saw a significant drop, with listings down by -29% compared to a -21% decline last month.
Due to the imbalance between demand and supply, a net balance of 39% of respondents expect rental prices to rise over the next three months.
RICS says this trend between demand and supply is partly driven by landlords selling their properties before a rumoured capital gains tax increase.
RICS President, Tina Paillet, said: “RICS survey results continue to highlight the pressures on renters, with demand consistently outstripping supply.
“While the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market.
“Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants.”
In the residential market, house prices are growing overall at a national level for the first time in two years.
According to the survey, while some regions like the West Midlands, South West, and East Anglia are experiencing smaller increases, September’s results showed a national price reading of +16%.
This marks an improvement from the flat 0% in August and is the first positive figure since October 2022.
Overall buyer demand recorded a net balance of +14%, marking the third consecutive month of growth. Sales sentiment also saw a slight increase, up by +5%. Looking ahead, a net balance of +23% of respondents expect the sales market to keep growing over the next three months, while longer-term sentiment for growth over the next twelve months is even stronger at +45%.
RICS Head of Market Analytics, Tarrant Parsons, said: “The latest survey results once again convey a brighter picture for housing market activity, with the recent easing in mortgage interest rates continuing to support a recovery in buyer demand.
“Critical for the outlook, a further unwinding in monetary policy is anticipated over the months ahead, which should create a more favourable backdrop for the market moving forward. In keeping with this idea, forward-looking sentiment data from the survey points to sales volumes gaining impetus, both in the near-term and over the next twelve months.”
Tomer Aboody, director of specialist lender MT Finance, says: “With lower rates and potentially a further cut in base rate on the way, buyers are feeling more confident about taking the plunge.
“Lower rates are resulting in better affordability, which is enabling buyers and sellers to be more active than they have been during the past 24 months, after rates shot up and left the market reeling.
“Although property prices are rising, we need to remember that they’re increasing against a lower benchmark from 2022 following the adverse market reaction to Liz Truss’ ill-advised Budget.
“Talking of budgets, we await to see what Rachel Reeves will deliver later this month, but very few are holding their breath for a positive outcome.”
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