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Rents are rising, says Findaproperty

publication date: Jul 31, 2009
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Average asking rents rose in July for the second consecutive month to reach £825, the highest level since March, reports Findaproperty. This suggests the rentals market is starting to recover but the rises so far are modest (+£6 pcm since April). At £825, rents remain significantly lower than in 2008, when they averaged £866. Compared with a year ago, average rents have eased by 5% or £43 and in that context the £6 rise is small, but it may be a sign that the market has bottomed out.

This small pick-up in rents has been accompanied by further declines in the number of rental properties coming onto the market. Stock levels had grown steadily up until early summer, particularly as home owners decided to let out prop¬erties that were tough to sell in a depressed sales market. This build-up of stock reached a peak in May (with a property count index of almost 365), and since then has begun to subside, to 363.3 in June and 358.5 in July. Stocks are now 1.7% below their high point in early summer, although they remain much higher (+68.4%) than in July 2008.

Better availability of mortgage finance, a modest pick-up in consumer confidence and a growing view that property prices are near the bottom has led to increased levels of homebuying activity as 2009 progresses. This has tempted many ‘reluctant’ landlords, forced to let their property while the sales market stagnated, to attempt to sell, withdrawing from the rental market and contributing to a fall in rental stock. This trend of reluctant landlords departing the rental market has been widely reported by estate agents, e.g. Cluttons (May 2009) and YourMove (June 2009).

The house and flat markets are diverging, with houses seeing rental price increases for the third month in succession and falling supply. Flats on the other hand, are continuing to see falling prices and increasing supply, although the rate at which prices are decreasing and supply is increasing is beginning to slow. These factors suggest the market may be nearing the bottom.