Falling supply seems likely to squeeze rents higher – RICSMake Text Bigger
As the new Government seems to be concentrating on increasing home ownership, falling supply in the lettings market seems likely to squeeze rents higher. As the headline tenant demand indicator (quarterly seasonally adjusted data) picked-up to post the strongest reading since the closing stages of 2016, landlord instructions fell once again, extending a run of continuous decline stretching back over the past thirteen quarters.
Near term rental growth expectations were therefore driven up, with the headline net balance of +25% in July representing the most elevated reading in twelve quarters.
Simon Rubinsohn, Chief Economist, RICS said:
“The lettings market data continues to send a very strong message that institutions need to upscale their build to rent pipeline to address the shortfall resulting from the decline in appetite from buy to let investors. It is significant that the near-term rental expectations indicator has climbed to a three-year high.”
When it comes to the outlook for house prices, near term expectations deteriorated over the month, but at the twelve month horizon, projections remain marginally positive in net balance terms.
Rubinsohn said: “The latest RICS results will provide little comfort for the market with all the key indicators pretty much flatlining. Indeed, the forward looking metrics on prices and sales also seem to losing momentum as concerns, clearly voiced in the anecdotal feedback, both about Brexit and political uncertainty heighten.
“Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy.”
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