RICS housing market survey May 2006 – July 2006
Tenant demand and rental levels accelerated in the quarter to July, driven by a strong economy, declining accessibility and immigration from EU accession countries, says RICS (Royal Institution of Chartered Surveyors), in its lettings survey published today (Thursday 31 August 2006).
30 percent more chartered surveyors reported a rise in rental levels, as demand growth exceeded supply growth, up from 20 percent in the last quarter. The rise in rents for the quarter to July was the strongest in the surveyâ€™s history, almost four-times the long run average. Surveyors report that immigration from EU accession countries (Government estimates stand at 427,095 since EU expansion) has put further upward pressure on rents in some regions. Surveyors are confident the upward trend will be sustained in the next quarter with 28 percent more surveyors reporting confidence in rental increases compared to 24 percent in the last quarter.
Tenant demand also accelerated in the quarter to July approaching the fastest pace since Q2 2001. 25 percent more Chartered Surveyors reported a rise than a fall compared to 19 percent in the last quarter with an ever strengthening economy and declining accessibility for first time buyers driving tenant demand higher.
Instructions to let property continued to grow, although the pace slowed for the second consecutive quarter, lagging behind demand. Tenant demand in London accelerated at the fastest pace since Q4 2000 with rents rising at the fastest pace in the surveyâ€™s history, driven by a strong corporate sector and migrant labour.
New investment in the rental market is subdued as gross yields remain low while ever increasing house prices are cooling interest.
RICS spokesperson Jeremy Leaf commented:
â€œEconomic prosperity and population migration have increased rental demand pushing up rents, making conditions better for property investors. However, first time buyers will find it hard to enter the housing market with higher rents making it difficult to save sufficient sums for a deposit.â€?
RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 120,000 members globally and represents, regulates and promotes the work of property professionals throughout 120 countries. RICS is governed by a Royal Charter approved by Parliament which requires it to act in the public interest. It is also a professional regulatory body approved by Government (HM Treasury).
Notes for editors:
RICS housing market survey is the longest running monthly survey of house prices in the country, collecting data since January 1978. The survey is cited by the Bank of England’s monetary policy committee at its monthly interest rate setting meetings:
http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2006/mpc0607.pdf (page 6, paragraph 21).
Stephen Thornton, RICS Public Affairs
T: 020 7695 1682