A buoyant private rented market continues to outshine the struggling sales sector, although there is cause for optimism long-term, reports The Royal Institution of Chartered Surveyors (RICS).
Its Residential Survey reports a mismatch between rising tenant demand and falling supply which is driving rents higher.
A net balance of +43% of agents saw an increase in tenant demand in September, while feedback around landlord instructions reflects a scarcity of listings (-24%).
As a result, rents are expected to be squeezed higher, with respondents pencilling in close to 5% growth in rental prices across the UK during the next 12 months.
"As a result, rents are expected to be squeezed higher"
Interest rates continue to hamper mortgage affordability, and results for agreed sales were stuck in negative territory, with a -37% net balance reported. RICS reports that this is slightly better than August and July, however, most agents expect a decline in sales volumes during the next three months.
Twelve-month sales expectations are now +3% (up from -5%), signalling a more stable trend in sales volumes in the coming year.
House prices remain on a downward trajectory with the September net balance of -69% barely changed from last month (-68%), while -33% of agents foresees prices continuing to fall.
Tarrant Parsons (pictured), senior economist at RICS, says: “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.”
RICS has called for the next UK government to hit housing targets by setting a housing strategy to help increase the supply of rented homes. It supports Labour’s intention to build 1.5 million new homes and establish a generation of new towns.