The latest RICS lettings market survey shows another increase in rental demand – but that demand appears to be slowing.

The institution’s regular sentiment survey shows a net balance of +33 of respondents noting an increase in tenant demand in the three months leading up to October.

Although still positive, this is the most modest reading for tenant demand since Q2 of 2021.

At the same time, landlord instructions remain in the negative with a quarterly net balance of -18 in Q4.

Looking ahead, a net balance of +53 of survey participants predict rental prices increasing over the next three months – this is easing slightly on the record high reading of +61 seen in Q3 2023.

Over the next 12 months, rents are projected to rise by around four per cent on average across the UK.

On the sales side, prices nationally – in terms of net balance – saw a slightly less negative reading then last time at -63 (-67 in September) suggesting that the pace of decline may be steadying as the end of 2023 approaches.

For agreed sales, a net balance of -25 (-35 in September) remains consistent with the overall weak activity levels that have been witnessed throughout October.

RICS Senior Economist, Tarrant Parsons, comments: “Plenty of caution remains evident with respect to both buyer and seller activity across the UK housing market, albeit the latest survey feedback points to a slightly less negative picture than that reported over the previous few months.

“Although base interest rates have now been kept on hold at each of the past two MPC meetings, the Bank of England was keen to emphasise that monetary policy is set to stay at a restrictive setting for quite some time yet.

“As such, mortgage affordability will remain stretched over the near-term, leaving little prospect of a strong rebound in residential sales volumes, even if expectations have now moved away from cyclical lows”.