11:16 AM, 10th November 2022, About 4 months ago
Demand across the lettings market is high and continues to push rents up, the latest surveyors’ report reveals.
RICS says that tenant demand continues to rise at a ‘solid pace’, with a net balance of +46% of survey participants noting an increase in October.
However, landlord instructions fell once again with a net balance of -14% of respondents.
RICS point out that given this mismatch, rents are expected to be driven higher over the near term, and over the next year surveyors say that rents will rise by around 4% nationally.
The survey also reveals that the UK house market continues to weaken, with last month bringing another drop in buyer demand and agreed sales – along with a halt in house price growth.
The October 2022 RICS Residential Market Survey also highlights that new buyer enquiries fell for a sixth successive month in the sales market.
Buyer demand is also negative across all parts of the UK, the second report running where this has been the case.
In keeping with the general pattern of a weakening market, the average time to complete a sale from its initial listing has edged upward, now taking close to 18 weeks.
Last year, the average completion time was closer to 16 weeks.
Simon Rubinsohn, RICS’ chief economist, said: “The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs.
“As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale.
“The settling down in financial markets could provide some relief although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon.
“However, the employment picture remains critical to the medium-term outlook and for the time being, that remains solid.
“As far as the lettings market is concerned, the imbalance between demand and supply still appears unusually extended leading to rent expectations in the survey remaining at elevated levels and it is difficult to see this changing anytime soon in the current environment.”
Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “Even naturally optimistic estate agents are starting to think that the writing is on the wall for house prices.
“The chaos in the mortgage market in the aftermath of the mini-Budget has been devastating, and the looming recession is likely to take an even bigger toll.
“House prices have already stalled, and in some areas, they’ve started falling.”
She added: “For anyone who decides to rent for a while – and wait to see what the market has in store – there’s more bad news.
“October saw yet another month of rising tenant numbers and disappearing landlords, so rents are still climbing, and finding a rental property is still an uphill struggle.”
Tomer Aboody, a director of property lender MT Finance, said: “With the uncertainty and disappointment around the mini-Budget affecting the markets, sending Swap rates spiralling which, in turn, pushed mortgage rates to levels not seen in 20 years, it’s not surprising to see a downturn in the market.
“A shift to renting in order to manage their short-term position has seen rents increase as demand outstrips supply.
“As mortgage rates slowly reduce to a more reasonable level, we expect the market to pick up, although not to the levels seen over the past 24 months.”
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Never was the saying – confidence takes a long time to build but can disappear almost immediately – so true for the property market.
“The mini-Budget frightened the life out of nearly all our buyers who are dependent on mortgages. Many have slowly emerged from hiding as rates stabilised and slowly began to fall.
“New buyer numbers have certainly dropped but we’re seeing no signs of a price collapse.”
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