0:01 AM, 10th August 2023, About A year ago 5
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According to the latest RICS Residential Market Survey for July, the rental market is experiencing a strong surge in demand, while the sales market is facing a sharp decline.
The survey reveals that +54% of respondents reported an increase in tenant demand over the past three months, the highest quarterly figure since the beginning of 2022.
However, landlord instructions continued to fall, with a net balance of -30% of respondents indicating a decrease.
This imbalance between supply and demand is pushing up rental prices, with a record-high net balance of +63% of respondents expecting rents to rise over the next three months.
Simon Rubinsohn, RICS’ chief economist, said: “The recent uptick in mortgage activity looks likely to be reversed over the coming months if the feedback to the latest RICS Residential Survey is anything to go by.
“The continued weak reading for the new buyer enquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.”
He added: “Just as concerning are the insights being provided around the lettings markets.
“Demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost-of-living crisis.”
RICS also says that the sales market is suffering from the impact of higher mortgage rates, which have dampened buyer demand.
Its survey shows that new buyer enquiries posted a net balance of -45%, like last month’s figure of -46%.
This indicates a significant drop in buyer interest across all regions and nations of the UK.
As a result, agreed sales also fell, with a net balance of -44% of respondents reporting a decline in July, the lowest figure since the early stages of the pandemic.
The outlook for the sales market is also bleak, with near-term sales expectations posting a net balance of -45%, substantially lower than previous months.
Moreover, over the next year, sales volumes are expected to decline, with a net balance of -25%, although this is slightly less pessimistic than last month’s figure of -31%.
Dan Wilson Craw, the deputy chief executive of Generation Rent, said: “When there is little stopping landlords from raising rent in line with the market, no private tenant is truly safe from the cost of renting crisis.
“In many cases tenants are being priced out of their homes and forced into the lettings market to compete for a new place to live.
“At the same time a lot of people who want to move can’t because rents on new tenancies have risen so rapidly. That has a knock-on effect for the number of homes coming on to the market.”
He added: “Long term the answer is to build many more homes in the places people want to live, including social housing to allow more people to escape private renting.
“But the government can help people now by protecting renters from unaffordable rent increases, and making sure housing support through the benefits system actually covers the rent.”
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Steve Masters
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Sign Up9:54 AM, 10th August 2023, About A year ago
Wow! It's not often I agree with Dan Wilson Craw but there are two things he said in this article that I do agree with:-
1.) “Long term the answer is to build many more homes..."
2.) “But the government can help people now by ... making sure housing support through the benefits system actually covers the rent.”
What ever next!
Old Mrs Landlord
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Sign Up11:13 AM, 10th August 2023, About A year ago
I'm struggling to make sense of "landlord instructions continued to fall with a net balance of -30% of respondents indicating a decrease". Do they mean 30% of respondents indicated a decrease in landlord instructions? If not, what do they mean by this minus figure in decreases? Am I just being thick?
Monty Bodkin
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Sign Up14:22 PM, 10th August 2023, About A year ago
Reply to the comment left by Old Mrs Landlord at 10/08/2023 - 11:13
It's an odd way of expressing it (substitute 'housing price' to 'landlord instructions');
https://www.investopedia.com/terms/r/rics-house-price-balance.asp
The housing price balance figure is calculated as the proportion of surveyors reporting a rise in housing prices minus the proportion reporting a fall in prices.
Monty Bodkin
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Sign Up14:40 PM, 10th August 2023, About A year ago
Minus 30% landlord instructions is the worst recording since the survey began in the late 1990's (excluding peak lockdown).
northern landlord
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Sign Up18:08 PM, 10th August 2023, About A year ago
There is little stopping landlords from raising rent in line with the market” why shouldn’t rents rise in line with the market like everything else does? It’s supply and demand. Rental property is becoming harder to find in the face of rising demand so rents are rising. If rents reach a point where nobody is willing or able to pay landlords have two choices depending on their circumstances drop their asking price or sell up. Any attempt to regulate markest typically ends up hurting the people it was intended to help.
I think the remark about people needing to “escape private renting” could have been better phrased. The PRS is not Colditz, the door is open, you can leave anytime you want.