City suburbs, commuter towns and coastal locations have recorded the biggest rise in rent for tenants in the last year, according to Rightmove. They state that average rents have hit the record of £1000 and city centres are starting to recover. There is record tenant demand and properties are being let out quicker than ever before. This has led to an average asking rent of a home outside London passing £1000 per calendar month for the first time.
Rightmove’s quarterly rentals trends tracker, based over 470,000 properties, with also several prospective tenants contacting agents about property for rent is currently 10% higher than in 2020. This is a benefit from the pent-up tenant demand when to rental market reopened and in Mid-May in England.
The average asking rent is now higher than this time last year. This is in every region expect for London. Whilst the capital is starting to see improvement but very slowly. London rents grew by 1.5% in the quarter compared to quarter one. This is the first increase since quarter one last year before the pandemic started. There is a quarterly increase which is being driven by the outer London zones.
City Centres
In the beginning of the year some big city centres found that there was decline in demand. A flood of rental properties enters the market together with tenants moving out was to blame. There are now signs that the tenants are starting to return and hoping to stabilise or increase rents.
For an example Nottingham city centre are now asking rents up annually by 6.8%. The best performing city is Liverpool. However, in London and Edinburgh are yet to recover. There is higher tenant demand, but the rents have not yet come to rise.
Areas that have seen the biggest rent rise over the past year includes city suburbs, commuter towns and coastal locations. Rochdale, Folkstone and Farnham have all seen asking prices jump by more than 25%.
The time for a letting agent now to find a tenant for a property is a record low of 21 days nationally. However, each area is different. The lack of available stock across the whole of Great Britain is quite substantial. This is up to 36%.
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Tenants
Tenants are being faced with low stock and record rents in many areas. These are often fuelled by some tenants signing a longer leases last year and perhaps a rush of people who chose to move back to the family from last year. People are now making plans to rent again and in many cases are starting to think about their daily commute. London rents are starting to creep up again but they are still lower than 2 years ago so it will take some time.
Demand for properties in the city centre surge in the last month. However, there is a shortage of stock is now the biggest problem. The city centre rents are continued to increase compared to this time last year. Since the lockdown, many agents are continuing to see a huge demand for property with outdoor spaces such as balconies, terraces, or gardens.
Some areas have had absolute hot spots such as follows;
Rochdale increase of 32.7%.
Folkstone increase of 26.7%
Farnham increase of 19.8%.
Altringham increase of 19.7%
Seven Oaks increase of 19.3%
Bognor Regis increase of 18.8%
Hockley increase of 18.4%
Blackpool increase of 18.1%
Camberley increase of 17.3%
Shrewsbury increase by 16.7%
Zoopla has also bought out a house index regarding sales.
They note that the current house price growth is 4.7% and demand for homes compared to 2020 is up 26%. However, the flow of new supply is down by 2%.
They state that the buyer demand has moderated as the stamp duty holiday ends but remains elevated compared to normal market conditions. There is a search for space among home buyers as well as an increased number of first-time buyers. People are starting to make lifestyle changes, and this will continue all the way through.
The total stock of homes for sale remains constrained and down 24% on a year to Mid-June compared to an average in 2020. Annual house price growth is up 4.7% up from 2.2% a year ago.
The spread of house price growth across the country continues to widen. With annual prices reaching a 10 year high in Wales, Yorkshire and Humber and the Northeast. Meanwhile London is lagging a 2.2% growth, the seventh month in that region has registered the lowest level of growth across the country.
Liverpool and Manchester continue to record highest level of price growth among the largest UK cities. Rochdale, Bolton, and Hastings are top of the charts in the 65 citizens towns monitored in the index.
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Price growth over the last year means that sum 1.8 million properties in England have moved into the highest stamp duty brackets. Sum 940,000 additional homes will be subject to a level of stamp duty at 5% should they be purchased by a homeowner. Next to 130,000 properties will attract more stamp duty at 10%.
The number of homes in the lower stamp duty bands in England is falling, whilst the price growth means it is rising for the top band. The average stamp duty payable on homes that have moved up into the 10% stamp duty bracket will be around £6,100 after the end of the stamp duty holiday in September.
Demand
Demand levels are moderate but remain elevated. Buyer demand levels have been elevated compared to “normal” market conditions since the housing market reopened during the first lockdown last year.
Demand has been boosted by the introduction of stamp duty holiday in July and its subsequence extension.
Demand has moderated from the unsustainable highs of April but remains elevated. This is being fuelled by several factors, not less the stamp duty savings still on offer for buyers of homes up to £250,000. This ends in September.
There is more activity among first time buyers who have a wider range of mortgages to choose from. They will still benefit from stamp duty savings up to £300,000 beyond June or September. The “search” for space among buyers is still evident. With some owners there is a higher level of equity have been provided by the pandemic and subsequent lockdowns to change their lifestyle. #
The market will be affected by way of how businesses start to reopen.
Guidance from companies and how they will operate in future when they fully reopen. Companies are shifting to more flexible working and some workers are certain to make a move for additional space or to a different location. This is if daily commuting is less. The supply for home for sale remains constrained and may limit potentially activity in some areas.
Fastest moving market in 5 years.
Time to sell, which measures how quickly homes are sold subject to contract are being listed, fell to 22 days in May down from 42 days in May 2019. The seasonal nature of the market means it moves quickly during April, May in most years. However, this is still the fastest moving market in the last five years.
The signals are that the market continues to move at a pace in May. Even with the prospect of larger stamp duty savings for homeowners was off the table.
Market outlook.
The stamp duty holiday boosted demand in the housing market, yet buyer demand remains elevated despite the initial holiday ending. This means that the once in the generation “reassessment of home” has further to run this year.
Demand may east further as the reopening of the economy allows people to do more and travel more widely. The confirmation of working practises for office-based workers will lead to more home buyers being able to push ahead with a move. The total stock of homes for sale continue to run well below historical norms and is well under pinned by pricing. At the same time, it may also constrain potential activity. This may be especially for buyers looking for family houses.
