The UK’s housing market is showing signs of recovery, according to the latest RICS residential survey for August – but renters are seeing costs rise.
The organisation says that a decline in mortgage interest rates has boosted buyer demand and sales activity, with industry professionals expecting further growth in the coming months.
The survey found an increase in the number of people looking to buy homes, compared to in July.
House prices are also beginning to rise after nearly two years of decline.
Shortage of properties for tenants
However, the rental market remains under pressure due to a chronic shortage of available properties for tenants, RICS says.
It warns that tenant demand continues to be strong, but the supply of rental properties is dwindling – new landlord instructions have fallen for the third consecutive month.
This imbalance is expected to push rents higher, with more respondents predicting rent increases in the coming months.
Landlords are scaling back
RICS’ chief economist, Simon Rubinsohn, said: “Affordability remains an issue in the sales market, but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish.
“Landlords are increasingly looking to scale back their portfolios, which will inevitably exacerbate the imbalance in the market.”
He adds: “The latest survey captures an improvement in sentiment over the past month in the wake of the modest decline in mortgage rates with buyer interest improving, albeit from a relatively low base, and stock levels edging up.
“However, anecdotal remarks from respondents still demonstrate the need for realistic pricing to get deals done with uncertainty both around the scope for further interest rate cuts and the likely contents of the forthcoming Budget keeping the mood in check.”
New rights for renters
Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “The government has been promising new rights for renters, but there’s no light at the end of the tunnel when it comes to the availability of properties or runaway rents.
“Tenant numbers may be rising more slowly, but they’re still climbing at a time when landlords continue to flee the market.
“Some of the agents are now reporting a surge in landlords selling up because they’re worried about potential changes to capital gains tax in the forthcoming Budget – which could simultaneously push ruinous rents up even higher and keep a lid on property prices in the sales market.”
‘Last of the summer sun’
Sara Palmer, the distribution director at The Mortgage Lender (TML), said: “The last of the summer sun warmed up the property market, with both new buyer enquiries and agreed sales figures continuing their upward trend according to the latest figures.
“This has been helped by mortgage rates easing in response to the Bank of England’s rate cut, prompting homebuyers and sellers alike to feel more confident as we enter the autumn season.”
Landlords can maximise yields
Daryl Norkett, the director of real estate proposition at Shawbrook, said: “Buyer demand continues to grow as the market continues its positive trajectory.
“With the new government putting housebuilding targets front and centre, optimism is returning to the sector.
“Professional landlords will also be hoping those targets are met to ease the significant supply strain and create a landscape of opportunity where they can maximise yields and meet the ever-increasing demand.”
‘Steady uptick in rents’
Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “There’s no doubt the recent cut in base rate has been a shot in the arm for the sales market which is certainly in better health than a few months ago.
“We found some buyers and sellers were holding off in anticipation, so are not surprised this historically reliable survey has picked up on that trend.”
He adds: “As far as lettings are concerned, we’ve noticed a steady uptick in rents but certainly not as substantial as we saw last year and in the early part of 2024.
“Unfortunately, more landlords are selling than buying at present mainly due to concerns about regaining possession of properties from disruptive tenants.”
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