Demand falling at last as rental market stabilises

Tenant demand in the past month has been the lowest since February 2021 and suggests that the pace of demand growth is slowing across the market.

That’s the view of the respondents to the latest snapshot study by the Royal Institution of Chartered Surveyors.

RICS undertakes a sentiment survey rather than anything more specific, and on the rental supply side it says new landlord instructions remain on a downward trend, evidenced by a net balance of 24 per cent of respondents seeing a decline in December.

Yet even with demand easing, the severity of the supply shortage means a net balance of 42 per cent of surveyors still believe there will be near-term rent rises.

On the sales side, there has been a further weakening in the market with expectations of a drift downwards in the early part of 2023.

There’s been a marginal dip in new buyer demand and a decline in agreed sales. And a net balance of 42 per cent of respondents have reported a decline in prices over the past month.

RICS says: “All regions across England are now seeing prices soften to some degree, with feedback pointing to East Anglia and the South East seeing the sharpest rate of decline in net balance terms. Respondents across the UK envisage some pull-back in prices in the three-months ahead.”

However, when asked if respondents are seeing greater interest from buyers in homes that are more energy efficient, around 40 per cent of the survey answered yes; meanwhile 41 per cent of respondents noted that sellers were attempting to attach a price premium on homes with a high energy efficiency rating.

By the same token, 61 per cent of respondents stated that highly energy efficient homes were holding their value in the current market.