Regional rental expectations soar as supply shrinks

Rental expectations have hit a three-year high as shrinking supply drives growth in regional hotspots. The RICS’s latest monthly snapshot of UK residential surveyor sentiment shows that most expect rents to increase as the volume of letting activity continues to decline. Lettings instructions fell by 11% in July according to the RICS, and have been on a downward trend since Q3 2016. Simon Rubinsohn, RICS chief economist, said: “The lettings market data continues to send a very strong message that institutions need to upscale their build-to-rent pipeline to address the shortfall resulting from the decline in appetite from buy-to-let investors.” RICS’ three-month rental balance, which compares the number of estate agents and property surveyors expecting a rise against those expecting a fall, sat at 25%. Surveyors were most positive about regional rental prospects, with the West Midlands, Wales and North West leading the way. In the for-sale market sentiment is weakening, with the majority of surveyors expecting house prices to decline. Sales rates per surveyor were 13.1 in July, a small uptick against the previous month’s 12.5 sales per surveyor, but still significantly below previous highs of nearly 20 pre-Brexit. The bleak outlook for sales was echoed by Halifax in its monthly house price index. House prices dipped 0.2% compared with the previous month, and were just 0.4% over three months, compared with the same period last year. Russell Galley, managing director at Halifax, said: “The average UK house price fell slightly for a second month, as the market continues to tread water with marginal increases or decreases in each monthly period. “In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.” To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette