Tuesday, Nov 27, 2007
Trying to inflate rental yields! Anything is possible I suppose!
BBC News: Tenant demand at 'five year high'
The level of tenants seeking to rent property privately has hit a five year high in the UK, the Association of Residential Letting Agents (Arla) says.
A number of factors have combined to push up demand including an increase in immigration, more people living alone, and a weakening of the housing market.
Posted by pmaupoil @ 12:04 PM (353 views) Add Comment
3 Comments
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1. dohousescrashinthewoods said...
Really? That's a bit of a stretch. My wife is being badgered by desperate EAs - in the rental market - they are even insulting her by saying she's "a bit picky" and she'll "never get anything at that price" to try and force through a commission.
Realistically, the market round here is dead. Nothing but tumbleweed at either lettings or sales desks.
2. Cheekie Charlie said...
Lets all move to Leeds city centre then, there's no shortage there.
3. George Sore Ass said...
To be fair, i would see tenant demand increasing as a sign of a housing crash. Personally i have not seen the signs yet in pricing, but I would expect it to happen.
There is often talk of a property shortage, but this is in fact untrue. Instead what has happened is that cheap IRs made it cheaper to buy, so the balance of demand shifted from rental to buying (often buying to let). The result is that the amount of property to buy was in shortage (as investors as well as those wanting to live in it were competing) but the amount available to rent increased. So rents have not gone up because there was excess supply. I looked up a place in used to live in SW london back in 2001. The rent available for a 1 bed in the block is 50 quid less than i was paying 6 years ago! During this time the price of the apartment has probably increased by 50%.
The fact that rents have not gone up over last 6 years exposes the 'shortage' argument as a myth. You might as well argue there was a shortage of companies selling cat litter on the internet in 1999. There was not, there was just an excess of gullible investors creaming themselves over putting money into anything with .com attached to it. Demand does not equal necessity. Very suddenly, the 'shortage' of .com shares became a massive surplus and the rest is history.
What I expect to happen in the next few years is that the price differential between renting and buying will once again close up to its natural level. House prices will fall as BTLs sell up, but there will be a corresponding reduction in the amount of property available to rent and that will probably mean rent increases until the balance is restored.
Considering the amount of apartments that have been constructed during the boom years, I would fully expect that house prices will move south more than rents will move North. Because booms tend to stimulate more building to cash in on high prices than would occur during times when price rises were more moderate.
All in all, excess demand for renting will be largely at the expense of the market to buy - people have to live somewhere but are choosing to rent instead of buy. So prices to purchase will fall as a result. It's a good sign of a HP crash that rental demand increases.