Supply and demand challenges remain in the PRS

Supply and demand remain static in the private rented sector but could soon rise in the New Year.

The latest figures from Propertymark’s Housing Insight Report reveal that 25% of letting agents saw rents rise in November 2023.

The run-up to Christmas saw more tenants struggling with rent arrears as financial pressures continued to mount.

Significant shortage of stock

According to Propertymark’s data, there remains a significant shortage of stock. On average, there were almost nine new applicants registered per member branch for each available property. The average number of new tenancies agreed per member branch decreased in November.

Nathan Emerson, chief executive officer of Propertymark, said: “In the lettings sector, supply and demand remain relatively static, but imbalanced with the equivalent of nine new applicants registered for each available property.

“Despite this, Christmas would appear to have come early to the sector, with the number of new tenancies agreed decreasing as tenants delay moving until after the festivities.

“Although rents continue to rise in key segments, around a quarter of our members reported rent falls in November (up from 14% in October and 4% in September) pointing to a market correction in motion.

“Looking forward to December, we are likely to see the entrenchment of seasonal trends as we head towards the end of 2024.”

Economic uncertainty

The residential market continues to remain challenging as the number of prospective buyers coming onto the market declines.

The number of registrations reduced from 53 in October to 49 in November. Whilst exacerbated by seasonal factors, a downward trend has been evident for some time.

There were on average just six new homes placed for sale per member branch in November, a 26% drop on October’s figure.

Mr Emerson adds: “Economic uncertainty continues to pervade the UK economy and housing markets. In the residential sales sector, seasonal trends are undoubtedly weighing on market performance.

“However, there are also strong indications that the market is cooling in general. Demand, as measured by new buyer registrations, is trending downwards and though offset by a reduction in existing stock levels and new supply, price pressures are increasing.

“This is evidenced by the majority of members reporting that properties continue to sell for less than asking price.”

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