Did you know that the average time it takes for a property let in the United Kingdom at this moment in time is only 14 days. That is literally 14 days from the date it goes on the market. One of the main factors of this is the consistent lack of supply that is currently on the market. Most people believe that the lack of supply is due to the fact that people don’t wish the expense of moving. Since Covid they are happy to stay where they are.
This means the rental growth for landlords is still extremely high and that some landlords are starting to see rent increases of up to and over 11%. Especially in certain areas that have hot spots.
Rents have already started to bounced back. With wages starting to now grow people have more money to spend on their properties.
Will this last forever?
Unfortunately, nothing lasts forever and with the ever increasing cost of living there is no doubt that in the long term rents may well start to come down. Probably not to the lower levels that they were just as the pandemic hit and during it. This is obviously good news for landlords but no necessarily for tenants.
According to recent figures from Zoopla, demand for rental properties in January 2022 was 76% higher compared to the new year market between 2018-2021. The stock of rental is 39% lower than the 5 year average for this time of year and rents have increased sharply.
This all gives good factors for the buy to let market. The buy to let market still offers attractive investment opportunities to existing and prospective landlords, particularly in areas where the demand is higher.
The pandemic has lead to many people seeking housing outside crowed towns and cities and there was a race for space. However, this trend is starting to slow down and people are starting to move back to the cities pushing rents up again.
The Government has now stated that they have dropped all of the pandemic regulations with people now starting to move back to offices. Hospitality business are now starting to trade as normal in additional. Students are starting to move back to universities to study so the market is starting to settle back down.
For example;
Manchester, is currently the second highest rate of economic growth of 13 major European cities in 2021. They saw a growth of 8% on last year.
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What about the rest of the major cities?
Rents in London are now starting to recover after falling by about 10% during the pandemic with many people starting to move back. You will find this in most of the major cities. London has now recovered fully in respect of the rentals but most cities are starting to get back to the pre-pandemic levels.
Sales market.
It is not just the letting market though that has a lack of supply. It is also the selling market.
Sale prices have gone up dramatically over the past two years with there being a huge amount of pent up frustration.
The current house price growth according to Zoopla is 8.3%. The demand for homes four weeks prior to the 24th April is 58% above the 5 year average.
Surprisingly the supply of new homes for sale is rising, but only up a modest 3% on a 5 year average. But some areas are starting to see significant increases. High buy demand is still driving activity with sales agreed in the run up to Easter some 27% higher than pre-pandemic levels.
House price growth near 15 year high.
The average UK house price has climb by £441 in March rising to nearly £249,700. This took the average rate of house price growth to 8.3% but slightly down from the peak in February of 8.8%.
The annual price growth now registering for the last 3 months is at its highest since 2007.
The problem is that house prices are being pushed up as buy to let demand remains strong in the face of more constraint supply. Whilst the supply is now starting to ease and more properties come on the market there are still more buyer than there are properties.
However, price growth is not evenly spread across the country. Some of the most affordable markets are seeing the sharpest growth in house prices, for instance with Wales leading the way at 12.1%.
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This could be good news for landlords as well as bad news. It often means that some landlords will decide to potentially sell some of their portfolio with a view to trying to find better returns elsewhere. But this may not always be the case.
What is the outlook for the sales market?
There are definitely positive sides that the supply of homes for sale is starting to now increase over the United Kingdom. This will then continue to help prices stabilise rather than keep increasing.
The market is not going to continue to increase throughout the year. There are huge amounts of pressure coming down the line of peoples budgets already starting to be squeezed with the cost of living. Not only will the cost of living start to affect peoples expenditure mortgages will as well. There is a high likelihood, as already taken place, that mortgages will start to get more expensive over the next few months to come.
This will mean that recent price rises might start to flatten out over a period of time and there is some discussion that we may go into recession.
A lot of property professionals feel that the prices will therefore start to stable and potentially come down later in the year but it is still a very volatile market.
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