Flow of fresh homes to rent ‘shrinks at fastest rate since 2020’
The flow of fresh rental properties coming to market has fallen at its fastest rate in five years, according to surveyors.
A net balance of 31% of professionals saw new instructions from landlords falling rather than rising, which was the weakest reading since April 2020, the Royal Institution of Surveyors (Rics) said.
Alongside the “firmly negative trend” in landlords making their property available for rent, tenant demand held steady in the three months to July, the report added.
With the lack of fresh rental home supply in the pipeline, rental prices are anticipated to continue to rise over the next three months by a net balance of 25% of survey participants, the report said.
Looking at the sales market, new home buyer inquiries fell back in July, the report said.
A net balance of 6% of property professionals reported new buyer inquiries falling rather than rising in July, indicating a softening in demand compared with the previous month.
In June, a net balance of 4% of professionals had seen a rise in fresh inquiries from buyers.
The report said that results across different areas appear to be increasingly variable, with relatively weaker demand trends reported in East Anglia, the South East and the South West of England.
Sales fell in July, with a net balance of 16% of professionals seeing falls, deteriorating further from a balance of 4% who noted falling sales in June.
Looking ahead, those surveyed expect to see little change in sales over the next few months, with a more positive outlook for 12 months ahead. A net balance of 8% of professionals expect to see a pick-up in sales in the year ahead.
A net balance of 9% of survey participants saw an increase in the flow of new property listings coming onto the market in July.
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
The latest survey also pointed to a small downward direction in house prices, with a balance of 13% of professionals seeing prices fall.
This compared with a balance of 7% seeing price falls in both May and June.
Going against the broader trend, prices continue to rise typically in Northern Ireland and Scotland, while professionals based in the North West of England are also seeing prices move higher, the report said.
At the other end of the spectrum, prices are reportedly falling at a more significant rate than the national average across East Anglia, Rics added.
Rics chief economist, Simon Rubinsohn, said: “The somewhat flatter tone to the feedback to the July Rics residential survey highlights ongoing challenges facing the housing market. Although interest rates were lowered at the latest Bank of England meeting, the split vote has raised doubts about both the timing and extent of further reductions.
“Meanwhile, uncertainty about the potential contents of the Chancellor’s autumn budget is also raising some concerns. Against this backdrop, respondents continue to report that the market remains particularly price sensitive at the present time.”
Sarah Coles, head of personal finance, Hargreaves Lansdown said: “The green shoots of recovery that agents were hopefully nurturing in June have dried up in July, with demand falling, fewer agreed sales, and a slight drop in house prices. The market always falls quiet during the summer holidays, but this is even more of a deathly hush than usual.”
She added: “We’re firmly in a buyers’ market right now, so there is a real chance to bag a bargain. For anyone who had been tempted to dip into their emergency savings to boost their budget, this is a chance to regroup.”
Ms Coles said: “With tenant demand remaining steady, yet again it means more people chasing fewer homes, and the era of runaway rents isn’t over yet.
“The HL (Hargreaves Lansdown) savings and resilience barometer shows this is incredibly tough on everyone – so the average renting household has just £62 left at the end of the month. However, it’s particularly horrible for renters living on their own – who end the month with a paltry £24. There’s every sign that an awful lot of them have been pushed as far as it’s possible for them to go.
“When money is so tight, it’s incredibly difficult to cover your costs, let alone put anything aside for a property deposit. However, if you can’t build anything at all, there’s a risk you’ll be locked into a cycle of ever-increasing rents.
“It means it’s worth considering all your options. This can include anything from making major compromises on where you live to moving back home for a period. There are also options that don’t require any of these sacrifices, such as asking family for help, or giving your deposit a boost from the Government through a Lifetime Isa.”
Tom Bill, head of UK residential research at Knight Frank, said: “The housing market is hitting a series of hurdles this year. April’s stamp duty cliff edge was the first and now buyers and sellers are increasingly unsettled by a re-run of last year’s game of ‘guess the autumn tax rise’.
“We had an interest rate cut this month, but it was priced in and the wider economic mood remains fragile. Supply still notably outstrips demand, which is also keeping a lid on prices.”
On Wednesday, financial information website Moneyfacts said that the average two-year fixed-rate mortgage on the market had dipped below 5% for the first time since before former prime minister Liz Truss’s so-called mini-budget in September 2022.
Moneyfacts said the average two-year fixed homeowner mortgage rate on Wednesday was 4.99%. This was down from 5.00% the previous working day.
Jeremy Leaf, a north London estate agent, said: “Agreed sales are mostly holding, supported by falling mortgage rates and a stable employment environment.”
On the lettings sector, Mr Leaf said: “We noticed that demand has dropped over the past month or so, especially for two-bed flats in older buildings, with more interest in modern, lower maintenance properties.”
