Rents across most of the UK look set to increase as rising demand from prospective tenants puts upward pressure on values, according to the February 2020 RICS UK Residential Market Survey.
Demand for property has increased in recent months, but the number of homes coming on to the private rented market has remained at a record low.
Surveyors have reported a shortage of properties to let which is driving up rental prices, with the number of properties listed by landlords for rent falling again last month - extending the decline since the trend was first recorded in 2016.
Rising demand for homes to rent and falling supply will see rents increase by potentially 2% - and up to 3% per annum by 2025 if this trend is maintained, according to RICS
Growing demand is also placing upward pressure on house prices.
The February 2020 UK Residential Market Survey revealed a net balance of +20% of respondents saw an increase in new buyer enquiries over the month, the third period of growth in a row.
In addition, experts are forecasting a better sales outlook for the rest of the year, with +61% of survey participants saying they expect more homes to be sold as the year progresses.
New homes coming onto the sales market also increased for a third straight month, with new instructions seeing a net balance increase of +15% in February – with West Midlands and the South East seeing the biggest bump in new properties coming onto the market.
Strong demand has also seen prices increase in February, with a net balance of +29% of contributors reporting house price growth – up from +18% on the previous month.
While there was growth in all regions of the UK, London, Yorkshire and the Humber and East Anglia all saw the strongest increase in house prices. Furthermore, a net balance of +22% are expecting house prices to continue to rise further over Spring.
But concerns have been raised by property professionals about the impact of coronavirus which although yet unknown, could adversely affect viewings and the traditional spring house selling season.
Simon Rubinsohn, RICS Chief Economist, commented: “It is encouraging that the results of the latest survey continue to show a positive trend both in terms of potential buyer interest and new instructions to agents. Indeed, this is the first time since 2014 that new supply to the market on the RICS indicator has increased for three consecutive months.
“Inventory levels are still at historically low levels despite this but the firmer trend in appraisals suggests that the picture could improve over the coming months providing the coronavirus doesn’t become more of an inhibitor of activity in the sector.
“For now at least, feedback around expectations are consistent with activity levels continuing to strengthen albeit relatively modestly.”