House prices rise as tenant demand slows – RICS

House prices rise as tenant demand slows – RICS

0:04 AM, 12th December 2024, About 2 hours ago

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House prices in the UK continue to rise, while rental demand has shown its first signs of slowing since 2020, RICS says.

Its latest Residential Survey shows that despite the slight dip in tenant demand, rent prices are still expected to increase soon.

This is due to the ongoing imbalance between supply and demand in the rental sector, with landlord instructions continuing to fall.

The drop in renter demand is the first time this has happened since 2020.

Steady improvement in buyer demand

Tarrant Parsons, RICS’ senior economist, said: “Although the latest survey results continue to signal a steady improvement in buyer demand across the residential market, the broader macro environment is likely to pose additional headwinds moving forward.

“Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity before long, and this is reflected in the slightly less optimistic sales expectations data coming through this month.”

He added: “Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this could begin to feed through into housing market conditions in the months ahead.”

House price growth strengthening

However, the UK housing market remains resilient, with national house price growth strengthening and buyer demand continuing grow.

This is despite higher mortgage interest rates.

The survey’s national house price indicator posted a figure of +25% in November, marking the fourth consecutive monthly increase.

Respondents also expect house prices to continue rising over the next three and 12 months.

New buyer enquiries remained positive, although agreed sales volumes were broadly flat.

Looking ahead, respondents to the RICS survey are predicting an increase in sales activity over the next three months.

Market data feels artificial

Tom Bill, the head of UK residential research at Knight Frank, said: “Current UK housing market data feels somewhat artificial.

“Demand is being boosted by sub-4% mortgage deals that are no longer available, and some buyers are acting ahead of a stamp duty hike in April.”

He adds: “Following the increase in government spending announced in the Budget, we recently revised down our UK house price forecasts to reflect the risk that inflation and mortgage rates will stay higher for longer.

“House price growth and transaction activity will feel more sustainable once the economy is heading decisively in the right direction.”


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