Home Property Rent expectations continue to fall in London

Rent expectations continue to fall in London

by Sponsored Content
9th Aug 18 7:13 am

The most striking feature of the July 2018 RICS Residential Market Survey for London is the continued reduction of new property being put on the market in the lettings sector with the July 2018 RICS UK Residential Market Survey showing 22% more respondents seeing a fall rather than rise in new landlord instructions. This is the third consecutive quarter in which this indicator has recorded a negative number.

This pattern reflects the shift in the Buy to Let market in the wake of tax changes which are still in the process of being implemented, as smaller scale landlords exit the sector. Significantly, the drop in instructions is evident in virtually all parts of the UK to a greater or lesser extent.

While the supply of fresh rental stock to the market is increasingly constrained, tenant demand has started to recover slightly in London. Demand is reported to be rising at a similar pace compared to last quarter, with the number of tenants looking for a new home remaining in positive territory at the headline level (+13% in Q3 2018, compared to +12% in Q2 2018).

However, this increase in tenant demand follows a prolonged period in which it has fallen, leading respondents to remain cautious on the outlook for rents. Indeed, rents are expected to fall in London over the next three months. 18% more contributors expect rents to fall in the capital, rather than rise, over the near term. The shortfall in supply over the medium term is expected to force rents higher in the capital, with respondents expecting a cumulative rise of around +10% (based on three month average of responses) by the middle of 2023. Even so, this is a little more modest than the projection nationally, where rents are envisaged to rise by 15% on the same basis.

Turning to the sales market, the London headline price balance was virtually unchanged, moving from +39% to +40% in July, meanwhile, the newly agreed sales net balance remained flat for the second month in succession in the capital. As we have highlighted previously, the feedback to the RICS survey continues to suggest a stronger market in Scotland, Northern Ireland, much of the north of England, the Midlands and Wales (prices and activity).

Leave a Comment

You may also like