Rent to rise this year and the long term

The latest market sentiment survey of the lettings market from the Royal Institution of Chartered Surveyors suggests that rent rises will continue all the way through summer and into future years too.

The survey - based on observations and forecasts from surveyors - says that a net balance of 54 per cent of its respondents cited a rise in March.

Interestingly, landlord instructions were reported to have increased for the first time since July 2020, with the latest net balance improving to positive six per cent from negative 21 per cent as recently as February.

In keeping with recent RICS surveys of the lettings market, rental growth expectations remain very strong with the latest net balance of positive 64 per cent.

The latest snapshot report says: “Furthermore, all regions are anticipated to see further material increases in rental prices over the next three months. Over the year ahead, rents are expected to rise by approximately four per cent while five-year projections sit at around five per cent per year through to 2027.”

For the sales market there is evidence from the surveyors that the drought in supply may be on the wane.

The number of new homes listed for sale in March rose for the first time in 12 months, as did new buyer enquiries. Demand and supply are more aligned than at any time since the outbreak of the pandemic, RICS says.

“Despite mounting concerns about both the macro environment and the war in Ukraine, for now the feedback to the RICS survey shows the housing market remains resilient” comments Simon Rubinsohn, chief economist for the institution.

He continues: “Rising interest rates have begun to push up the cost of mortgage finance but debt servicing remains low in a historic context which helps to explain why the new buyer enquiries indicator remains in positive territory.

“Meanwhile, it is encouraging that a little more stock appears to be returning to the market. This is still early days in that inventory remains not far off historic lows but if the trend continues, it could help to create a better balance between supply and demand.

“That said, there is little evidence of this outcome materialising in the twelve-month metrics which continue to point to further increases in prices and a flatter pattern in transactions.”