North West’s rental market picks up as housing sales market falters

As the new Government seems intent on increasing home ownership, tenant demand for rental homes in the North West increased in July, with rents expected to rise in the coming months, according to the monthly 2019 RICS (Royal Institution of Chartered Surveyors) Residential Market Survey.

In July 50% more letting agents in the North West reported an increase in tenant demand for rental properties, based on quarterly seasonally adjusted data.

Yet, despite 11% seeing a rise in the number of landlord instructions last month – up from just 1% in Q2 – the increase in demand for homes to let, coupled with fewer available rental properties coming onto the market, has resulted in 36% of respondents expecting rents to increase over the coming three months, up from 27% in Q2.

Andrew Jackson, of Ian S Parr Chartered Surveyors in Bury, said: “High selling prices and property values are causing people to rent, and more demand for rentals is pushing rents higher.”

Looking at the housing sales market, 8% of agents reported a rise in new buyer enquires in July – down from 22% in June – while 15% saw an increase in agreed sales, down from 20% in June).

This slightly flatter activity isn’t surprising as the level of new sales instructions coming on to the North West’s housing market fell last month.

Looking further ahead, 33% of respondents expect sales to increase over the coming 12 months as prices look set to continue rising in some areas of the region; 13% of agents saw an increase in house prices last month and 24% expect prices to increase further over the year-ahead.

Andrew Jackson added: “As the uncertainty around Brexit continues we expect there to be a slowing down in the residential sector until a definitive decision/action is taken either way.”

Simon Rubinsohn, RICS chief economist, said: “The latest RICS results will provide little comfort for the market with all the key indicators pretty much flatlining.

“Indeed, the forward-looking metrics on prices and sales also seem to losing momentum as concerns, clearly voiced in the anecdotal feedback, both about Brexit and political uncertainty, heighten.

“Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy.

“Meanwhile, 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. It is significant that the near-term rental expectations indicator has climbed to a three-year high.”