A recent report from Moves with Us indicates that asking prices for rental properties dropped in the United Kingdom (UK) in the month of January, although average rents are up as much as 1.3% in prime locations. Analysts say the decline is largely due to a drop in asking prices for London properties, which slipped 1.07% for the month. Experts believe the trend is caused by landlords who are more interested in maximizing occupancy and avoiding late rent payments rather than increasing the cost of rent, which has kept supply steady in the face of demand. For more on this continue reading the following article from Property Wire.
Rental asking prices fell across the UK last month despite most regions recording rent increases, mostly due to a 1.07% average decrease in London, according to new research.
Overall rents are generally stable and most regional rental markets are keeping pace with retail price inflation with the North West emerging as the best performing region with rents increasing by 1.31%, says the report from Moves with Us.
The average advertised rent in the UK currently stands at £972, which is still £35 more than January 2012 and seven of the 11 regions examined experienced minor rental price increases throughout January.
The trend for regions such as the East and West Midlands, Wales and the South East, suggests a period of stability and small fluctuations around a constant price level. In addition, the trend for the North and South West suggests continued rental price growth keeping pace with retail price inflation.
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Though East Anglia and Scotland both saw rents recover from a seasonal fall in advertised rents in December, it is yet to be seen how prices will behave in the long term.
Prices fell slightly in Yorkshire and Humber, marking an end to the 6% increase registered in late 2012. A similar situation occurred in the third and fourth quarters of last year, with rent increases temporarily tailing off before recovering.
The report says that February should see similar rental market conditions to January. Market growth of above 0.5% should occur in most regions, with rental prices increasing at around the rate of inflation.
London rents are likely to fall at a slower rate than January as rental prices begin to recover, whilst advertised rents in Yorkshire and Humber should stabilise and return to growth. In addition, Scotland may see the first two months of consecutive growth since the first three months of 2012.
‘Rental asking prices have remained stable throughout January, and indicators suggest that they will remain fairly stable into the next quarter. Minimal evidence of demand pressures, combined with stable supply, suggests that the market has reached an equilibrium point,’ said Robin King, director of Move with Us.
‘The supply of advertised properties remains at around 180,000, as landlords appear more interested in maximising occupancy and avoiding arrears than increasing rents. On the demand side, there has been little movement in average wages, while increases in home loan availability are allowing more people to enter residential markets,’ he explained.
‘A result of this is house price inflation, which combined with on going rent stability will start to erode rental yields. However, landlords are compensated by capital yield improvements,’ he added.
This article was republished with permission from Property Wire.