PRS supply crunch fuels rent hikes while house prices rise – RICS

While tenant demand for rental properties has stabilised, landlords selling up continues to push rents higher, RICS says.

Its latest survey for December 2024 reveals that 37% of respondents anticipate further rent rises.

They say this is mainly down to a growing number of landlords putting their properties up for sale.

This trend saw 37% of respondents reporting an increase in landlord sales compared to 29% in November, which is reducing the rental supply.

Stable tenant demand

RICS says that despite stable tenant demand, the lack of homes to rent is creating a competitive market.

Consequently, this lack of supply is pushing rents up.

The RICS report highlights growing activity within the wider housing market, culminating in a generally upward trend for 2024.

House sales continue to increase, with 5% of respondents reporting an increase in new buyer enquiries.

Although this represents a decline from the 11% recorded in November and October, sales volumes have shown an uptick, with a net balance of 7% of respondents indicating sales growth compared to 1% in November.

Properties listed for sale

New instructions, reflecting properties listed for sale, experienced a rebound, potentially influenced by stamp duty changes.

RICS says that 14% of respondents reported an increase in listed properties, marking the sixth consecutive month of increased listings.

House prices are currently on the rise across all regions of the UK, with Northern Ireland and Scotland experiencing the most significant price growth.

While the current outlook remains positive, rising gilt yields present a potential challenge for the housing market in the coming months.

RICS Residential Market Survey

Simon Rubinsohn, RICS’ chief economist, said: “The latest results from the RICS Residential Market Survey points to a further improvement in sentiment in the housing market despite concerns about the potential impact of rising bond yields on borrowing costs.

“Buyer enquiries rose once again, albeit at a slower pace than in November, and the headline price indicator also moved higher.”

He adds: “More significantly, the signals from the survey around expectations over the next 12 months also remain solidly positive for now.

“However, the resilience of the uplift in market mood could be tested if the mortgage rates do begin to climb in a material way over the coming months.”