The latest residential market survey from the Royal Institution of Chartered Surveyors is raising a red flag over what it calls ”a huge mismatch” between demand and supply across the private rented sector.

It says this is leaving renters tackling ever-rising living costs and plummeting affordability levels.

There latest RICS sentiment survey shows tenant demand rising notably to +35% (net balance), up from +10% in May. 

Meanwhile new landlord instructions are flat, triggering a warning from RICS that “the growing gap between supply and demand for lettings indicates that rental prices will continue to rise for the foreseeable future, albeit at a slower pace than previously.”

RICS Chief Executive, Justin Young, says: “Despite an improving overall outlook, today’s data reveals that confidence in the housing market is beginning to dip – just as parties launch their manifestos. While both the Conservatives and Labour have staked their claims as being the party of home ownership, for that to be the case, greater attention must be paid to improving conditions for ‘generation rent’ who are faced with rising rents and a lack of suitable options. T

“This particular demographic – typically made up of people aged between 18 and 40 – has doubled in the last two decades, so politicians need to focus on them, as well as homeowners, as a means of gaining the support of a growing portion of the electorate.

“The housing market needs policies that think longer term, not short, and awareness that the different tenures are interlinked, so there is no one solution that will fix the situation. With the market under strain, the supply and demand gap in both lettings and buy side continues to create issues.

“With higher interest rates continuing to hamper first-time buyers, politicians are looking to win support from this group of buyers –as the Conservatives have done with Help to Buy 2.0 and Labour with the Freedom to Buy promise.

“Many millions of voters are feeling both cost of living, and market impacts; the political parties see this and are trying to entice the electorate with proposals in their manifestos this week.”

In the sales market, as prospects for an imminent cut in interest rates has ebbed and the cost of living crisis continues, there has been a small drop in new buyer demand in the sales market, with a -8% (net balance) result recorded nationally compared to the flat picture reported in April. 

This latest figure is the lowest reading for new buyers since November 2023. Buyer demand was weakest in the South East and South West of England.

Respondents also report a fall in the number of sales agreed during May, although it is expected that sales volumes will rise modestly over the coming three months. Moreover, the outlook for 12 months ahead remains relatively upbeat, with +43% of survey participants anticipating an uplift in sales activity, rising from +33% in April.

House prices continued to retreat nationally, posting a -17% result compared to -7% in April. Consequently, having been steady in both March and April, the latest data suggests that house prices fell slightly in May. Regionally, Scotland and Northern Ireland saw house prices continue their upward trajectory.