The RICS market latest snapshot points to rising rents, despite little movement in the lettings sector.

The monthly RICS market study is a sentiment survey, rather than dealing in hard data, but surveyor respondents suggest that tenant demand recorded a figure slightly below zero for a fourth month in a row,.

Consequently, this is longest stretch without a positive reading for this indicator since RICS began this measure in 2012.

The organisation says: “This points to a broadly stagnant trend rather than an abrupt downturn. Alongside this, landlord instructions continue to show negative momentum, registering a net balance of -22%. Despite the subdued demand backdrop, a net balance of +34% of survey participants foresee rental prices rising over the coming three months. Whilst demand is down, supply appears to be reducing at a faster rate, likely causing further rental price rises.”

On the sales side RICS says buyer demand has weakened, posting a net balance reading of -14% in February. This is down from -1% in January and marks the weakest result for the survey’s gauge of buyer demand since November 2023.

According to respondents, the oncoming changes to Stamp Duty arriving on April 1, where the threshold will reduce from £250,000 to £125,000, is expected to weaken market activity, and it is believed that this is increasingly influencing the slowdown as deadline approaches.

Further to this, geopolitical and international economic uncertainties contribute to a less favourable climate for the housing sector.

Despite these challenges, house prices at a national level continue to rise overall, albeit at a subdued rate. The latest net balance came for price growth came in at +11%, which remains consistent with a subtle upturn in prices. However, this series has now moderated in each of the last two months, easing from +25% and +21% in December and January, respectively.

Respondents note that that whilst the recent interest rate cut by the Bank of England was welcomed, there is an appetite for the Bank to go further.

Looking to the future, whilst the market is expected to continue to soften in the short-term, most respondents believe that house prices will rise over the next 12 months. Indeed, the net balance for the year-ahead price expectations series sits at +47%, broadly in-line with the average reading posted over the past six months.

Simon Rubinson, RICS Chief Economist, says: “The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches. Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment. That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.

“A key support for the market continues to be the increased flow of existing stock becoming available, giving buyers a greater choice of options. However, leading indicators around new build remain subdued for now, highlighting the significance of the Planning and Infrastructure Bill introduced to Parliament this week.

“Meanwhile, despite a flatter trend in demand for private rental properties, the key RICS metric capturing rental expectations is still pointing to further increases demonstrating that the challenge around supply spans all tenures.”

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