Short-term hope but pressures remain for rental and sales alike
The latest RICS UK Residential Market Survey suggests market continues to struggle, but a more stable picture is emerging in the near term.
Survey respondents reported that new buyer enquiries returned a net balance reading of -19% in August, consistent with soft underlying momentum for buyer demand, but the least negative reading since January.
Agreed sales, at a net balance of -17%, were the least negative since February and more than half of the -38% recorded in April.
The near-term sales expectations measure returned a net balance of -3%, up from -13% previously, while a net balance of +6% expect sales volumes to increase over the next twelve months, up from +3% recorded last month.
New instructions registered a net balance reading of zero, compared with -2% in July, while market appraisals were -17%. House prices reported a net balance of -28% from -29% in July.
Rising tenant demand outstrips supply
For landlords, a net balance of +18% of survey participants reported an increase in tenant demand, but landlord instructions registered a net balance of -14%. +44% of respondents expect rental prices to rise in the short term, up from +33% in July, with expectations of a 3% average rise over the next twelve months.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said the expected rise in rents would add to cost-of-living pressures for renters.
“Tenant demand is getting stronger at the same time new buyer enquiries are weak, and looking ahead, sales listings are not expected to materially change over the short term. Affordability issues are glaringly obvious amid the lack of more affordable housing, yet this is not helped at a time when mortgage rates are rising,” she said.
“There will be some prospective buyers deciding it is a safer bet to continue in the private rental market for now, but with the RICS landlord instructions indicator remaining in negative territory, there is the obvious danger that tenant demand continues to outstrip supply, putting prolonged upward pressure on rents.”
Louise Apollonio, sales and distribution director, retail mortgages at Shawbrook, agreed. “While it is positive to see improvements in new buyer enquiries and agreed sales, a sustained recovery is likely to take time,” she said. “Ongoing uncertainty around interest rates and energy prices is understandably making both buyers and sellers more cautious.”
