The Royal Institution of Chartered Surveyors (RICS) has reported a positive turn in UK house prices, with notable increases across various regions in October. However, the rental market faces ongoing challenges, as tenant demand outpaces landlord supply.
The latest RICS UK Residential Market Survey revealed that 16% of survey respondents observed a rise in house prices last month, with areas including Northern Ireland, Scotland, the North East, North West, and London showing significant gains. Yorkshire and the Humber, however, was the only region to record a decline.
New buyer enquiries rose by 12% in October, marking the fourth consecutive monthly increase, and an optimistic 20% of respondents now expect house prices to continue rising over the next three months, up from 12% in September.
Strong regional variations
The survey highlighted that most UK regions are anticipated to experience growth in house prices over the coming year, with Northern Ireland and Scotland leading the way. Yet, the rental market presents a stark contrast, where demand is consistently outstripping supply. Nearly 20% of RICS members reported a rise in tenant demand over the three months to October, while landlord instructions dropped by 29%.
Tina Paillet, RICS President, commented, “The growth in residential sales could be further supported by recent interest rate decisions by the Bank of England.” She added that the looming end of the higher stamp duty threshold in spring 2025 might create a rush among buyers, though “this will likely be followed by a weaker trend after the deadline has passed.”
Landlords under pressure as tenant demand climbs
The gap between rising tenant demand and dwindling landlord instructions has driven expectations of increased rental prices, with 33% of respondents anticipating rental rates to climb in the next three months. This trend underscores the ongoing supply-demand imbalance in the rental market, particularly as high tenant demand fails to meet reduced landlord availability.
The RICS report suggests that more needs to be done to address this disparity, with many landlords citing regulatory changes, economic pressures, and limited incentives as reasons for withdrawing from the market.
