RICS survey reveals rising rents and falling house prices

The UK’s housing market is facing a tough time, with the latest survey from the Royal Institution of Chartered Surveyors (RICS) revealing that rents are expected to rise by 5% over the next year, while house prices are on a downward trend across the country.

The survey, which covers September, depicts a challenging market backdrop, with interest rates continuing to hamper mortgage affordability, and the disparity between tightening lettings supply and rising demand causing rent price rises.

According to the survey, tenant demand in the lettings market increased in September, with a net balance of +43% of survey participants reporting an increase.

However, landlord instructions continue to decline, with a net balance of -24% indicating a scarcity of listings available on the rental market.

‘No end in sight for rental market pain’

Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “There’s no end in sight for rental market pain, as every passing month brings fewer rental properties and more tenants competing for them.

“The Prime Minister’s postponement of the plan to make sure all rental properties have an EPC rating of C or better will ease some concerns among landlords, but the Renters (Reform) Bill – outlawing no-fault evictions – will still be enough to persuade some to invest elsewhere instead.”

She added: “The comments from letting agents have moved beyond talk of concerns and high demand, with one saying the market is structurally fractured, and another talking of a crisis for basic housing.

“The upshot of it all will be higher rents, which the report says are likely to rise 5% over the coming year.”

House prices are falling across the country

House prices remain on a downward trajectory at a national level, with a net balance of -69% from all respondents, signalling that house prices are falling at a consistent pace over the past couple of months.

The survey highlights that the biggest price drops have been seen in the West Midlands and the South East of England.

The RICS’ survey also shows that home buyer demand continues to fall, along with sales and prices with new buyer enquiries at -39% in September, indicating weak demand.

And the agreed sales figure also remained in negative territory, with a -37% reading reported.

The average number of properties on estate agents’ books has held steady at 38 since July.

‘Buyer activity across the housing market remained subdued’

RICS’ senior economist, Tarrant Parsons, said: “With mortgage affordability still incredibly stretched, it is unsurprising that buyer activity across the housing market remained subdued in September.

“Although the decision to pause monetary policy tightening a few weeks ago provided a glimmer of relief for the market, interest rates are likely now set to remain on hold for a prolonged period.

“As such, it appears there is little prospect of trends deviating much from the recent picture in the immediate future.

“That said, the outlook a little further ahead has improved slightly, with twelve-month sales expectations moving out of negative territory for the first time in several reports.”

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