9:01 AM, 14th November 2024, About a month ago
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The Royal Institution of Chartered Surveyors (RICS) has painted a bleak picture of the UK’s private rented sector (PRS), with a widening gap between supply and demand.
The latest UK residential market survey revealed a net balance of +19% of respondents reported increasing tenant demand over the past three months.
However, landlord instructions, a measure of properties being made available for rent, fell significantly, with a net balance of -29%.
This is the weakest reading since the end of 2021, RICS warns, and 33% of respondents say they expect rents to rise over the next three months.
RICS President, Tina Paillet, said: “Our data continues to indicate that renters are feeling the pressure from a limited supply of rental properties and rising rents.
“While the Autumn Budget announcement of immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, it will make it more challenging to address the critical shortage of rental homes.”
While the rental market struggles, the residential sales market continues to strengthen, the index reveals.
House prices overall rose, with all regions reporting price growth except Yorkshire and the Humber, and the South West.
New buyer enquiries increased by +12% in October, extending a four-month trend of growing demand.
Looking ahead, a rising share of respondents believe house prices will continue to rise over the next three months, with this indicator moving to +20%.
Virtually all parts of the UK are expected to see house price growth in the coming year, particularly in Northern Ireland and Scotland.
Ms Paillet said: “The growth in residential sales could be further supported by recent interest rate announcements by the Bank of England.
“Meanwhile, the pending expiration in the higher stamp duty threshold in spring 2025 may cause homeowners and first-time buyers to rush to take advantage of the current rate, but this will likely be followed by a weaker trend after the deadline has passed.”
Tarrant Parsons, RICS’ head of market analysis, said: “The UK housing market saw a continued pick-up in activity through October, with the recent improvement in buyer demand translating into growth in the number of sales being agreed.
“Just as importantly, forward-looking sentiment points to this brighter trend remaining in place of the coming months.
“That said, the rise in bond yields following the Budget, alongside a general increase in financial market implied interest rate expectations over the past couple of weeks, will likely present something of a headwind for the market to contend with over the short term.”
