The latest RICS Residential Survey has provided a lot of optimism for house buyers and sellers, but less for tenants, who are set to contend with an even tougher market.
The survey, which asks estate agents for their opinion on the housing market, found a “sustained improvement in market activity”, with measures of demand, sales and new listings “all continuing to return positive readings”.
It’s the third successive report in which the demand indicator has been positive.
Agents expect further growth in sales in the coming months – despite fears over the budget – as well as expansion in the market for the year ahead.
Tomer Aboody, director of specialist lender MT Finance, said: “With lower rates and potentially a further cut in base rate on the way, buyers are feeling more confident about taking the plunge.
“Although property prices are rising, we need to remember that they’re increasing against a lower benchmark from 2022 following the adverse market reaction to Liz Truss’ ill-advised Budget.
“Talking of budgets, we await to see what Rachel Reeves will deliver later this month, but very few are holding their breath for a positive outcome.”
Kathleen Brooks, research director at XTB, added that despite the “uptrend in housing in the last few months” the moderation in some sub-indices like sales expectations, price expectations and new buyer enquiries, could indicates that some UK consumers are “holding back on big ticket purchases like houses until after the budget”.
Tenants set for more trouble amid house sales improvement
The lettings market continued to tighten month on month, with higher demand and lower supply.
A net positive balance of 22 per cent of respondents to the survey reported an increase in demand in September, which, combined with a “long-running decline in the volume of landlord instructions coming onto the market”, bodes badly for rents.
The net balance between demand and supply of rental homes slipped to negative 29 per cent, from 21 per cent in August.
While RICS warned that rents are likely to increase, a net positive balance of 39 per cent of respondents envisaged rental prices increasing in the next three months, unchanged from August.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The unfortunate loss of too many good landlords from the private rented sector without being replaced in sufficient numbers has meant choice for the steady increase in tenants is limited, resulting in hardening rents.
“When the implications of the Renters’ Rights Bill are more fully appreciated as it passes through Parliament, other landlords may follow suit if unable to sell before the expected CGT increase in the Budget.
“However, in our offices we have noticed affordability concerns are weighing heavily on tenants so a significant proportion are simply unable to afford to pay much more.
“Therefore, renewals are up and landlords remaining in the sector are insisting on even stricter references before proceeding.”