The February 2017 RICS UK Residential Market Survey shows key activity indicators in the sales market remain subdued with transaction volumes broadly unchanged for the third month in succession.

New buyer enquiries were again flat and have now failed to see any meaningful growth since November 2016. Near term expectations remain positive but point to a relatively modest rise in activity in the months to come.

In the lettings market, tenant demand rose for the third consecutive month as 15% more respondents noted an increase (rather than a fall) on a non-seasonally adjusted basis. Nevertheless growth in demand is more modest than a year ago when 29% more respondents reported an increase.

The flow of new landlord instructions, however, reportedly deteriorated, with a net balance of -10% the weakest reading in over two years. This negative trend is likely to persist over at least the next couple of months as changes to mortgage interest tax relief start to take effect in April.

As such, rent expectations remain in firmly positive territory with a net balance of +24% in February. Further out, over the next twelve months, survey respondents forecast rent to rise by a further 2.7%. Moreover, rental growth is anticipated to accelerate to average 4.4% per annum over the next five years. The London rental market continues to be an exception with surveyors reporting weak tenant demand along with negative near term rental expectations.