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London letting agents are predicting a fall in rents over the next three months.
the Royal Institution of Chartered Surveyors has reported.
Its latest Residential Market Survey has a net balance of 50 per cent of respondents confirming the prediction.
Overall letting agents reported tenant demand had increased in the three months to January, supported by a net balance of 12 per cent of respondents. However demand had moderated and new landlord instructions had fallen for the second quarter in succession.
Rental growth expectations across the UK as a whole were ‘marginally positive’.
When it came to house sales, estate agents have reported a new year drop off in activity. A net balance of 28 per cent of respondents said they had experienced a decline in new buyer enquiries in January – the first time in seven months this had happened, said RICS.
There was also a decline in the number of listings, with a net balance of 38 per cent of respondents noting a fall in new properties coming onto the market (the first negative result since May 2020). New appraisals undertaken over the month appeared weaker than this time last year (net balance 26 per cent), suggesting new instructions ‘look challenging’.
Despite the gloomy economic outlook, house prices have been driven up, with a net balance of 50 per cent of respondents seeing an increase in January – signalling a significant degree of upward pressure on prices across the UK – apart from London. In the capital a net balance of 9 per cent of respondents noted a fall in prices, marking the first negative reading for prices since July 2020.
‘The latest RICS survey suggests that despite attempts to keep the housing market open through the latest lockdown, there has been perhaps an inevitable impact on the level of activity in the sector with both enquiries from potential buyers and new instructions slipping back’, said RICS chief economist Simon Rubinsohn.
‘That said, actual transaction numbers will remain firm over the next couple of months reflecting the completion of deals that in many cases were agreed through the back end of last year. The appeal of properties with more room and outside space is, meanwhile, a theme that continues to be strongly evident in the responses to the survey.
‘Alongside this, renewed concerns are evident regarding the supply of properties in the rental market. Changes in the regulatory framework as well as the tax regime are frequently cited as drivers of this trend which is widely seen as pushing rents higher in most parts of the country despite current affordability concerns.
‘London is a notable exception from this trend with private rents viewed as remaining under pressure over the coming months’.