The latest market snapshot from the Royal Institution of Chartered Surveyors suggests that rents are to increase “firmly” in the near future.
The November sentiment report produced by RICS today shows that tenant demand saw another solid monthly increase with a net balance of +48 per cent of agent respondents citing a rise.
Meanwhile, landlord instructions fell according to a net balance of -24 per cent of participants.
Given this mismatch between rising demand and dwindling supply, RICS says: “Rents are anticipated to increase firmly over the near term, returning a net balance +49 per cent.”
Over the next 12 months, RICS agents says they expect around four per cent growth in rents at the national level, with increases expected to average roughly five per cent per annum over the next five years.
The sales side also shows a significant and growing mismatch between demand and supply.
Those responding to RICS’ late-November sales survey reported a net balance of +13 per cent in new buyer enquiries, a slight increase on the +11 per cent reported in October.
But there’s a net balance fall of -9 per cent in agreed sales – this is the fifth time in a row a negative result has been reported.
Respondents frequently said the continuing drought in new listings was a significant factor holding back the market nationwide – with a net balance of -18 per cent of respondents noting a deterioration for an eighth consecutive month.
Simon Rubinsohn, RICS chief economist, comments: “The issue of supply is gathering ever more importance … the theme runs strongly both through the latest set of contributor comments as well as the data around new instructions and the decline in inventory on agents books.
“Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant than any shift in the interest rate environment for new buyers.
“The imbalance compared to the demand trend is, meanwhile, likely to continue to be a key factor supporting prices and indeed, even if the cost of mortgage finance does begin to edge up, it is likely that house prices will continue to move higher through the coming year, albeit at a somewhat slower pace than over the past 12 months.”