RICS sees private resi rent rises on the horizon

In July 2024, the residential rental market saw the gap between demand and supply widening as demand rose at 18% net balance, while sentiment towards landlord instructions lowered by 16% net balance. The latest RICS UK Residential Property Survey found that while the growth rate of the gap reduced a touch, the continued movement indicates likely further rental price rises for the foreseeable future. Meanwhile, the average mortgage rates have lowered during the month due to the anticipated rate cut by the Bank of England. RICS said that this has improved positivity in the sector. However, the full impact of the central bank cut and the UK government’s announcements on housing reform will not be evident until next month’s report. It further found that new buyer enquiries picked up a little in July, with more buyers looking to buy a home – a result of +2%, up from -6% last month. This is the first time in four months that that the UK has seen a positive number of buyers looking to enter the market. The number of agreed sales also saw an improvement. While this month’s -2% net balance result is still inside negative territory, it is a clear improvement and continues the positive trajectory since it scored -13% and -6% in May and June, respectively. Looking at the sales numbers over the next three months, a net balance of +30% of respondents predict sales rising over the next three months, which is the most positive sentiment since January 2020. The long-term, pertaining to the next 12-months is also more optimistic, with +45% net balance of respondents expecting sales increases in twelve months, up from +40% net balance. Looking to house prices, the figures suggest these were still decreasing at the UK-wide level. The overall figure, which captures and combines all UK regional data, reported a -19% net balance result. All English regions exhibited negative sentiment towards prices, with East Anglia and Yorkshire & the Humber exhibiting the weakest readings. However, Scotland and Northern Ireland saw prices rising. Looking ahead, +46% net balance of respondents expect prices to be higher in a year’s time. RICS chief economist Simon Rubinsohn said: “The new government’s focus on boosting housing development alongside the recent quarter point base rate cut does appear to have shifted the mood music in the sales market, with projections for both near and medium activity picking up, according to the latest RICS Residential Market Survey. “Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector. “However, if there is a bit more hope regarding the sales market, the difficulties in the lettings market remain as intense as ever with little prospect of any relief in sight. “Demand is continuing to run ahead of supply with many respondents to the RICS survey noting that landlords are looking to reduce holdings in the face of an increasingly hostile environment for investment in the sector.” Photo © Andy Rain/EPA-EFE/Shutterstock