- The rate at which asking rents are falling and the volume of stock is rising has slowed over the past three months, signalling that the UK rental market may be reaching the bottom of the cycle.
- Average rents in March 2009 were £827 pcm compared with £830 pcm in February 2009 and £873 pcm in March 2008.
- Continued tenant activity has reduced the average time a property is on the market by five days over the month to 65 days, but time on the market remains up by 17 days year-on-year.
- The UK is becoming a tale of two markets: house rentals have seen supply levels stabilise and start to fall (-1.3% month-on-month decrease in March 2009), whilst the supply of rental flats continues to rise
- Rents in London continue to fall, but again at a slower rate, with asking rents falling by 1.1% month-on-month and by 6.9% year-on-year.
- UK rental yield remains stable at 4.65%.
The second quarter of 2009 will be a key period for determining whether this is the beginning of a genuine recovery in the rental market. Patterns in the supply and demand for rental properties will also provide key indicators on the state of the UK sales market.
Andrew Smith, Head of Research, comments:”The UK rental market over the past year has been a story of rising supply levels outstripping tenant demand, which in turn has led to falling rental asking prices. There now seems to be some evidence that this downward spiral is slowing and as such we may be reaching the bottom of the market.”
“We believe that the slowing increase in supply is due to landlords becoming more realistic and accepting lower offers combined with many accidental landlords returning their properties to the sales market.”
“Economic instability and low consumer confidence mean that it is impossible to predict what will happen to the rental market over the coming months; however, we believe that there are signs that we may start to see supply levels tighten and rents begin to rise towards the end of 2009.”
“We are seeing some indications of recovery in the house market as rental supply levels have already begun to fall. In the case of large family homes with more than five bedrooms, (one of the hardest hit sectors of the market) rents have already started to increase and were up by 2.1% in March.”
“On the other hand, the supply of flats continues to rise and this may lead to a slower recovery in this sector. This large supply issue has been caused by the lack of interest from first-time buyers and the large number of new-build apartments constructed in recent years”
Check the full FindaProperty.com Rental Index to review a further breakdown of the data.
The FindaProperty.com Rental Index is created using a statistical methodology developed by Calnea Analytics, the company who produce the official Land Registry house price index.
FindaProperty.com chose Calnea in order to ensure that the data was analysed to the highest possible standards by a company with an outstanding track record in the analysis of house price information.
The FindaProperty.com Rental Index is an asking prices index which measures:
- Changes in house prices and rental values at UK level, regional level, city level and London borough level.
- A gross rental yield figure calculated using average sale and rental values
- Time on the market (number of days a property is listed)
- Supply levels – the number of properties listed
- Demand levels – based on rental enquiries generated by FindaProperty.com
For further information, please contact:
Maud Rousseau, Associate Director
Tel: 020 7886 0327 / 07813 850 341
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