Plummeting UK house prices and a decline in buyer demand are having a knock-on on the UK rental market, according to today’s UK Residential Survey published by the Royal Institution of Chartered Surveyors (RICS).
House prices are predicted to continue falling, with RICS noting a decline in buyer demand for the 11th consecutive month in March.
The balance of agreed sales subsided to -31% in March from -25% for February and RICS members expect sales to remain under pressure over the next few months, with a net balance of -29%.
“In keeping with this demand/supply imbalance, respondents continue to anticipate rents being squeezed higher, with the net balance for near-term rent expectations rising to +59% from +45%,” the RICS survey warned.
This puts rents back towards the highs seen in the early part of last year while for the year ahead, surveyees pencilled in roughly 4% growth in rental prices at the national level.
All parts of the UK are expected to see an increase in rents during the coming twelve months.
The cost-of-living crisis has only exasperated the problem, with energy bills still high despite near-term relief.
A BBC report underscored fierce competition among tenants chasing an ever-dwindling supply of increasingly pricey rental homes.
In London, tenants in the inner-city borough of Newham are bearing the brunt of soaring rent costs, with average prices increasing over 20% since 2020.
Tower Hamlets, Greenwich and Lambeth tenants have also been acutely impacted.
“The rental market remains hugely constrained by the lack of stock,” said Simon Rubinsohn, chief economist at RICS.
“Indeed, the consistency of the message from contributors to the survey about the shortfall of properties to rent and the impact this is having on rent levels is striking,” Rubinsohn stated, adding: “The shifting tax and regulatory environment are highlighted as impacting the viability of many landlords operating in the sector.”