RICS residential lettings survey October (3rd quarter) 2009. Surveyors expect to see rent rises in the New Year as the number of rental properties coming onto the market fell for the first time since January 2008, says the latest RICS Lettings Survey published December 2, 2009).
The recent pick up in the housing market seems to have led to drop off in the number of rental properties, particularly houses, being made available and as a result surveyor optimism has increased for the first time since July 2008. Some 22% more surveyors expect rents to rise rather than fall in the next three months.
The drop off in supply is the main driver for the more positive sentiment, with new instructions reaching their lowest levels in the surveys history (1998). A net balance of 11% of surveyors are seeing the number of new instructions coming onto the market falling rather than rising. This is in stark contrast to levels seen late last year when the housing market was still suffering from falling prices and many would-be sellers were turning to the lettings market when their houses failed to sell.
Currently the reading for past rents, although still negative, is the least so since July 2008 with only 4% of Chartered Surveyors still reporting falling rather than rising rents, indicating that the downward pressure on rents is already starting to ease. Significantly London and the North are already seeing the majority of surveyors reporting price rises over the past three months.
Demand for rental property is still rising as 16% more surveyors saw activity over the past three months pick up; in particular demand for houses was particularly strong with 22% more surveyors reporting rising rather than falling numbers of people looking to rent. Tenant demand was strongest in London, but increased in most other parts of the country, bar the east.
RICS spokesperson Jeremy Leaf commented:
"It seems the current upward trend in the housing market is having a more significant effect on the lettings market, with many of the accidental landlords returning to the sales market to take advantage of the recent price increases. As a result the recent oversupply is reversing, with new instructions at the lowest levels we have seen. This of course is impacting on prices and tenants no longer have as strong a bargaining power as they did."
Source: RICS Residential Lettings Market Survey