Rent prices squeezed higher while house sales sluggish

Lettings market ‘frenzied’ as a result of fierce competition

Fierce competition for rented properties is squeezing prices higher in a ‘frenzied’ lettings market, while housing sales remain downbeat, research by surveyors has found. Tenant demand reached a five-month high with strong demand seen across the country, the Royal Institution of Chartered Surveyors (Rics) said.

But the degree of new landlords to instruct properties declined, leading to a demand and supply imbalance that means rents could be pushed higher.

The proportion of surveyors who said they expect rents to rise in the next three months jumped to 59 per cent, up from 45 per cent in the previous month’s survey, and nearing the highs seen toward the start of last year.

All parts of the UK are set to see an increase in rent prices in the year ahead, professionals said.

The research is a monthly sentiment survey, by Rics, of chartered surveyors who operate in the UK’s residential sales and lettings markets.

It also collects the views of property professionals alongside the survey.

Meanwhile, new house buyer demand fell for the 11th month in a row in March, Rics found.

While surveyors still expect sales to remain under pressure in the next few months, they were less downcast than in February amid expectations of interest rate rises coming to an end.

It also marked the first time in more than a year that the proportion of surveyors expecting sales to pick up in the next 12 months was positive.

Furthermore, the proportion of professionals who noted a decline in house prices slowed for the first time in 10 months.

Simon Rubinsohn, Rics’s chief economist, said that the overall tone of feedback from surveyors was ‘still one of caution’ over the sales market.

He said: ‘Deals are being done, but a theme coming through in the anecdotal remarks is the need for vendors to recognise the shift in market dynamics.

‘Significantly, there is also a sense that the medium-term outlook is looking a little more settled, helped by the perception that the interest rate cycle may be near the peak.’