The supply of new properties coming on to the rental market in Hong Kong has fallen for the second consecutive quarter.

The move brings to an end the downward spiral in rents that has been in place since the autumn of 2008.

The net balance of chartered surveyors reporting rising rather than falling rents in the three months to January 2010 was zero, according to the latest RICS Lettings Survey published this week. The outlook for rents continue to strengthen with a net balance of 33 percent of respondents believing rents will rise over the coming quarter (up from 22 percent).

The more positive picture for rents can be attributed to the continued decline in supply of both flats and houses in the marketplace. 23 percent more chartered surveyors reported a fall rather than a rise in the number of new landlord instructions for this period, up from 18 percent in the previous quarter. Although the weather may have been a factor in this, it is more likely that the upturn in the housing market has tempted many of the accidental landlords away from the lettings market, said the RICS survey report.

"If demand remains strong, which it is likely to as many first time buyers are still finding themselves priced out of the housing market, then rents should continue to rise as would-be tenants compete for less properties" RICS spokesperson Jeremy Leaf said Friday.

David Faulkner, RICS Hong Kong Chairman said, "In Hong Kong the number of residential units available for letting has fallen and landlords are starting to increase rents. The limited supply of new residential units caused sale prices to rise significantly in 2009 as a result of which rental yields are at record lows, and renting is an attractive option for people who cannot afford to buy at current prices."