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.
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I've been an agent in the Midlands for 30 years and I've never seen an imbalance like it. What's worse is it's all entirely avoidable and, I'm afraid, absolutely 100% the fault of the government. It started with the SDLT levy and removing higher rate tax allowance for finance costs, then more and more legislation, the tenant fees act pushing up their costs and capping deposits, tenant oriented hyperbole and removal of CGT allowance. What does anyone expect? If this government is trying to kill the PRS they are going the right way about it. Without change I'm afraid it is doomed. That just means less and less supply and higher and higher rents for those 'lucky' enough to secure a property. It is a mess.
Andrew Strevens FNAEA
It isn’t doomed at all, but it’s going to get a lot more expensive for tenants, for the reasons you say.
Does anyone seriously believe either red or blue party will actually solve the housing crisis? They have both supported Right to Buy and complete lack of new social housing during their various reigns, and that is the OG here.
The housing market is pretty much like the UK's economic health, human physical and mental health, transport, rivers, soil, farming/food industry...... it is all falling apart and voting for pretty much the same, just slightly less worse (hopefully), isn't really going to change anything. Don't kid yourself.
If you really want to solve the housing crisis then vote for a party which you know will tackle it head on and make hard decisions. Like £120 billion over 10 years to build sufficient social housing and meet one of the three basic human needs.
Trouble is, that type of party puts community first and the individual second which for some bizarre reason doesn't fit into this world where everyone complains about the state of the world, including the author here. I wonder who they will vote for?
The red lot are going to win regardless, so this is a genuine chance to vote for what your heart wants rather than what your head says (aka 'what the media says'). You may not get this chance again.
RICS can ring as many alarm bells as the want but nobody is listening. 😱 ALL politicians, Polly Bleat and her gang of charlatans, Ben Twomey and his Generation Rant and let’s not forget Bungling Boy Beadle smell blood in the water. Landlords have two choices: bleed or get out of the water. Surprisingly they are getting out of the water! 😠
But they are not leaving though, are they? The stats don’t support this at all.
I have increasing numbers of landlords looking to buy, out viewing, and keen to add to their portfolios. They are mostly cash-rich.
The bleaters and the highly-mortgaged will always bleat, no matter what is happening in the market.
eve, you can prove anything with stats. Try reading LandlordToday - the overwhelming opinion is that landlords are selling. there are even agents on there confirming that landlords are selling up.
Strange for an agent to attack their customers by calling them bleaters. Still, you know best.
Yup, I am an agent and for years, have had a consistent level of managed properties. In the last 6 months 20% of them have sold. I do not need to say any more than this. The one thing I must say though, is that a lot of landlords got into the BTL market when interest rates were artificially low and are now paying the price. I do however, agree that all the onerous burdens thrown at them by the government have also had a significant impact on profitability in the PRS.
Franke, what do you mean profit ? Thatcher sold off council housing on the grounds that maintenance charges were greater than the rent. That applies to the prs, and a lot of prs landlords are mom and pop who do a lot of work themselves. If one charged the right rate for work done plus vat it would be a dead duck. It's the capital appreciation that is any gain and it will disappear in CGT etc.
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