According to a reputable property website, the rental market’s exceptional demand is anticipated to have a significant impact on limiting the supply in the sales market, subsequently preventing price declines. The website, Home, highlights rising yields and short void periods of less than three weeks as factors that make letting properties an attractive choice for reluctant sellers, while also acting as a safety measure for the sales market. Home’s monthly market snapshot reveals a continued overall increase in rental rates.
The UK witnesses a substantial annualized rise in rent, averaging at 11.8%, with the West Midlands experiencing rent inflation surpassing 18%. Notably, in London, the boroughs of Bexley, Kensington, and Hillingdon lead in rent growth, with annual increases of 40%, 39%, and 34% respectively.
While rental prices surge, the sales market faces stagnant price growth, accompanied by a surge in unsold property, reaching a 30-month high and surpassing the 10-year average. Home, the website, warns that prices and stock levels typically peak during the summer, making it unclear whether the recent sales market volatility is attributed to the Bank of England’s base rate hikes or a seasonal slowdown.
However, the website expresses disapproval of the Bank of England’s strategy, stating that the decision to raise the base rate by an additional 0.5% to 5.0% last month has created apprehension. The UK property market had been gradually restoring confidence following a significant price correction at the end of the previous year, with a return to slow growth. However, concerns now arise that increased borrowing costs and negative media sentiment could trigger a downward spiral.
The website raises alarm over the rapid increase in stock levels, which is always a worrisome sign. Pricing had been benefiting from low stock levels, but the surge in stock over the 10-year average last month raises concerns. It is worth noting, though, that stock levels were rebounding from rock bottom after the COVID-19 boom depleted agents’ portfolios to historically low levels.
Home acknowledges that despite the perception of a slowdown, there are areas where sales prices are still increasing, and overall marketing times do not indicate a significant deceleration. The northern regions, along with Scotland and Wales, exhibit notable improvements compared to July 2018 data.
Similarly, London and the Midlands, as well as the East and South East of England, show slight increases compared to their pre-Covid figures. The Typical Time on Market for the South West remains unchanged from July 2018, according to the website’s findings.
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