A recent report showed that rents in the United Kingdom (UK) had fallen in the first three months of 2013, but more detailed data indicate that regional variations are experiencing more fluctuation than what the average may indicate. Move with Us reports that while rents in London have fallen they still remain more than twice as high as the national average. Even so, experts believe the numbers are a sign of stability in the UK rental market. Move with Us analysts predict very little change in average prices, and if anything happens it will likely be a further dip caused by changes in supply. For more on this continue reading the following article from Property Wire.
Average rents in the UK fell nationally by 0,43% in the first three months of 2013 but new figures show that there are significant changes and regional variations.
The latest rental index from Move with Us put the average national rent at £969 per month but this rises to an average of £2,181 in London, although rents in the capital city have fallen.
The firm says that although average rents are fluctuating the overall picture is one of stability with changes in supply causing minor fluctuations in the prices and the current quarterly trend suggests that rents could fall further in the coming months, though if this is the case it should be by less than 0.5%.
However, the long term trend indicates that advertised rents are more likely to remain at a similar figure, with possible increases close to the rate of inflation, according to Robin King, Move with Us director.
The first quarter of 2013 saw significant changes in the regional trends when compared to the second half of 2012. As advertised rents in the North grew at a slower pace than 2012, the South of England remains much stronger than the rest of the country with a £121 gap between the cheapest southern region and the most expensive of all other regions,’ he explained.
‘In comparison, the North East and East Midlands have seen some of the larger price increases of 2012 offset by a fall in advertised rents in the first quarter. While advertised rents in both London and Wales fell for a second quarter, the rents in these regions have now returned to levels close to those of January 2012,’ he said.
‘The most consistent regions were Scotland and East Anglia, with rental prices in both increasing at a steady rate throughout. Advertised rents in Scotland appear to have recovered from a difficult end to 2012, seeing two successive quarters of stable rental price growth which is likely to continue throughout 2013. Yorkshire and Humber remains on an upward growth path, despite rents falling in the early part of the quarter. Advertised rents also increased in the North West and South East, though they remained at around the same level throughout March,’ he added.
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The index also shows that advertised rents in Greater London fell to £2,181 per month, extending the current trend to a third quarter. The market did recover slightly in February, though by the end of March this was offset as rents fell further.
‘Proportionally, this is not incredibly significant, marking a 1.69% fall at the end of the quarter. Furthermore, the rate with which advertised rents have fallen has halved, suggesting that the market is close to equilibrium,’ said King.
Average advertised rental prices in the South East have remained stable at around £1,115 per month since August 2012, and this has continued throughout the first three months of 2013. Rents increased by 2% in January, compensating for the 2% fall seen in the previous quarter. Throughout February and March rents remained stable with average rents standing at around £1,117 per month at the end of the quarter. Rental prices are now around 4.73% higher than they were in January 2012, the second highest regional increase.
After a disappointing end to 2012, the South West started well with a promising 0.2% increase in advertised rental prices. This, along with the price stability recorded in March, suggests that the region’s rental market is returning to the trend seen through most of 2012, says the index report. Rents fell by around 2% in February due to a large increase in housing supply. However, the firm says that this appears to have been a temporary phenomenon which can be attributed to seasonally low demand and slow property turnover in the market. The average rental price stands at £799 per month, a 2.96% increase from the end of 2012.
As a region characterised by stable, cyclical rental growth, the firm says that it is not surprising that East Anglia started 2013 with a rent increase of 2.29%. These increases were constant throughout the quarter, with advertised rents increasing by an average of £20 per month in the first quarter, reaching £882.
Rental prices in the East Midlands fell for the fourth consecutive month in March, decreasing by 1.22%. It was previously the second highest regional performer with increases of over 10% in the second half of 2012. However, advertised rents fell by around 4% in December 2012, suggesting that the market price is much lower than previously valued. But from the middle of February, average rents remained stable at around £629 per month, suggesting that they may have reached their equilibrium point.
Average advertised rents in the West Midlands remained stable, falling by 0.04%. In January, rents increased by 0.7% and reached £659 per month, however over February and March they returned to their original levels. The current price level is £654, which follows the long term trend of rents remaining fairly constant and fluctuating around this figure.
Average advertised rental prices in Yorkshire and Humber look promising after a difficult start to 2013, standing at £627 per month. January and February saw rents fall by around 5%, with a 2.89% recovery in March. The report says this suggests that the region will continue to catch up with the rest of the northern regions in the next quarter.
The North East is another region that seems to have over reached in terms of advertised rents. After increases close to 18% in the fourth quarter of 2012, the market appears to be correcting itself and rents are falling to meet demand. In the first quarter of 2012 advertised rents fell by 9.46%, standing at £656 per month, leaving the average rent £60 lower than December 2012.
Average advertised rents in the North West rose by around 2% in January, before falling 0.4% over February and March. Overall, rents have increased by 1.61% to £645 per month, with growth since January 2012 at 7.07%. The quarterly trend may suggest that the market has peaked and will remain at this price level, however the long term trend suggests that this should be a temporary setback, the report says.
Advertised rents in Wales fell by 3.23% in the first quarter to £656 per month. This brings growth for the year at 3.25% in a fourth consecutive month of gradual decline which can be mainly attributed to the market correcting itself as supply increases.
Advertised rental prices in Scotland experienced an unexpected up turn as average rents rose to £678 per month, an increase of 4.55%. This is a marked change from the markets performance in the latter part of 2012, when rents fell by around 2%. Scotland is now the most expensive of the northern regions, surpassing the North West, North East and Yorkshire and Humber in the space of three months.
This article was republished with permission from Property Wire.