Between the third and fourth quarters of 2008, the net balance of Chartered Surveyors reporting rises (rather than falls) in rents fell from -12 percent to - 48 percent, the lowest level in the survey's history. The change has been most marked in London and the South. The net balance of surveyors reporting rises in rents for London houses fell from - 53 percent to - 71 percent while for flats, the balance fell from -33 percent to -76 percent. However the biggest turnaround was in the South West where the net balance of surveyors reporting rises in rents for houses plummeted from 0 percent to -73 percent. Equally, the balance of surveyors expecting further falls in rents was the most depressed reading since the survey began.
Surveyors are, however, still reporting that gross yields are rising although the net balance of just 10 is the lowest since the three months to January 2008. This implies that rental levels are not at present falling quite as fast as house prices.
Low levels of housing transactions may be contributing to an increased demand for rental property. 42 percent more Chartered Surveyors reported a rise than a fall in rental demand compared to 29 percent in the previous quarter.
But the survey suggests that the more powerful influence on the market is the rise in supply. The net balances of surveyors reporting new instructions to let both flats and houses (an indicator of supply) still remain firmly in positive territory. 46 percent and 53 percent more Chartered Surveyors reported a rise than a fall in new instructions to let flats and houses respectively. Surveyors report that frustrated vendors are placing their property on the market to let as they have been unable to agree sales.
RICS spokesperson Jeremy Leaf commented: "The market place has become more and more competitive as reluctant landlords continue to look to let properties they are unable to sell. With property sales at historical lows, the rental market will continue to boom - provided unemployment levels do not increase significantly. The downward pressure on rents will increase in the coming months where supply matches demand but with house prices still falling, yields will continue to increase for many investors."