We run through a quick summary of key property news from key industry sources…
Average advertised rents hit new record high of £1,291 pcm: Rightmove
The latest analysis from Rightmove indicates a bustling rental market with a slight improvement in supply compared to its peak during the pandemic. However, there’s still a significant gap from pre-pandemic levels, with nearly 50,000 more rental properties needed to meet the demand. While there’s been an 11% increase in available rental properties compared to last year, it remains 26% below 2019 levels. Despite a 17% decrease in tenant inquiries compared to last year, demand remains high, with agents fielding an average of 13 inquiries per property.
Rental prices have hit a new record high, with the average advertised rent outside London reaching £1,291 per month and in London reaching £2,633 per month. Although there’s a slight slowing in rental price growth, affordability remains a concern, with a 22% increase in rental properties seeing price reductions compared to last year. Larger properties are particularly affected, with 30% of top-of-the-ladder properties seeing price reductions.
While there are some improvements in supply and a slowdown in rental price growth, the rental market still faces challenges in meeting demand and ensuring affordability. Landlords are advised to consider both affordability and demand when setting rent levels to minimize void periods.
Interest rates to hit 3% in 2025 predicts leading economic consultancy
KPMG predicts that interest rates will rise to 3% by the second half of 2025, after an initial cut of 100 basis points this year. Despite a slight economic pickup since the beginning of the year, the outlook remains weak by historical standards, with GDP growth forecasted at 0.3% in 2024 and 0.9% in 2025.
Inflation is expected to return to the 2% target in the first half of the year, potentially leading to interest rate cuts from summer. While falling interest rates may stimulate liquidity conditions and private equity deals, long-term finance access issues persist. The labor market shows signs of softening, with employers cautious about new hires, although a low participation rate and labor supply could counterbalance this. Pay growth is projected to ease but outstrip inflation. Chief Economist Yael Selfin notes that while there’s evidence of economic recovery, persistent weaknesses in supply potential will cap growth at 0.2-0.3% per quarter.
RICS UK Residential Survey, March 2024
The RICS UK Residential Survey for March 2024 indicates a positive outlook for the housing market in both the near and longer term. Buyer demand and sales expectations have risen, with stability in house prices reported.
New property listings have increased for the fourth consecutive month, while buyer enquiries have also gone up significantly. Expectations for future sales volumes and activity are optimistic.
Despite a modestly positive outlook for tenant demand, there’s a shortage of available rental properties, leading to expectations of rising rental prices. The UK government’s ‘Levelling Up, Housing and Communities (LUHC) Committee’ has launched an inquiry into the home buying and selling process to explore potential improvements.
RICS welcomes this inquiry and aims to provide valuable input. Tarrant Parsons, Senior Economist at RICS, notes a gradual recovery in demand across the housing market and expects the Bank of England to lower interest rates later in the year, which could further support the market. However, limited scope for significant acceleration in activity is expected due to relatively high mortgage rates compared to previous years.
Source: https://www.rics.org/news-insights/rics-uk-residential-property-monitor-march-2024
