By Andrew Batt:
The rental market in the United Kingdom appears to have recovered from what was a difficult start to 2012, according to residential property experts Move with Us.
Their first Rental Index report covering Q3 2012 provides a comprehensive picture available of rental prices for the U.K. The report uses weekly data and tracks more than 150,000 advertised rental properties across England, Wales and Scotland.
Average rents fell slightly during the early part of Q3 before recovering during September. Prices remain at around £970, a slight decline from the Q2 average. Over the last 12 months, prices have increased by 2 percent, adding around £20 per month to the average rent.
Robin King, Director of Move with Us, said: "The index confirms a consistent and increasing demand for rented properties across all regions. Many aspiring homeowners struggle to qualify for mortgages which is leading to increased demand in the rental sector. These long-term renters are demanding higher quality accommodation and look to stay for much longer than we have previously seen."
Over the past 15 months, London has seen large fluctuations in rents including a period of price inflation in the lead up to the Olympics. Rental prices are still more than twice the national average but have fallen back to more affordable levels in Q3. The last quarter has seen London rental prices stabilise at around £2,270 after falling from an Olympic induced high of £2,411 in June. They now appear to be recovering from this setback as rents increased by 0.2 percent in the last two months of the quarter.
Yorkshire and Humber has one of the lowest and most stable average advertised rental rates in Great Britain, so a 7 percent increase in rents was unexpected. The average rent is now closer to the rest of the North and Midlands, at around £602 per month, compared to £559 at the beginning of the quarter.
King said: "Yorkshire and Humber is an area to watch, with what seems to be a surge in demand for rented accommodation in an area largely associated with home ownership. This resulted in rents increasing by 7 percent in the last quarter. Alternatively, rents may just be catching up with those in surrounding areas. Overall, we should expect further rent increases in Q4, with the majority of regions continuing along their current trends. However, these may be short-lived as the economic effects of low wage inflation coupled with higher energy and fuel costs start to bite."
Market Report
London
Over the past 15 months, London has seen large fluctuations in rents including a period of price inflation in the lead up to the Olympics. Rental prices are still more than twice the national average but have fallen back to more affordable levels in Q3. The last quarter has seen London rental prices stabilise at around £2,270 after falling from an Olympic induced high of £2,411 in June. They now appear to be recovering from this setback as rents increased by 0.2 percent in the last two months.
South East
Rents in the South East are significantly higher than the rest of the UK due to its close proximity to London. Q3 has seen the average advertised rents peak at £1,120 per month before returning to around £1,110 at the end of the quarter. Average rents remained between these two figures over the quarter without significant fluctuation.
South West
The third quarter began with steady advertised rent increases in the South West, contrasting with much higher growth rates registered in the previous quarter. Rent inflation accelerated from August, averaging 0.5 percent per month. The total increase in average rents over the quarter stood at £9 or 1.2 percent. Rents have recovered with sustained growth from May, hitting a peak of £787 and showing no signs of decline in the next quarter.
East Anglia
Landlords across East Anglia have seen a 2 percent increase in advertised rents in Q3, marking a third successive quarter of growth. This is in keeping with the steady growth characterising 2012. Prices recovered by 4% between February and September, following a difficult second half of 2011. There was a small decline in September, leaving rents averaging £871 per month.
East Midlands
Rental price increases in the East Midlands accelerated in Q3 relative to Q2. This took rents to 3.5 percent above their July 2011 levels, with monthly rents rising from around £587 to over £600 between July and September. The current trend suggests the average rent will rise further for the remainder of the year.
West Midlands
The West Midlands had an encouraging start to the quarter, with advertised rental prices recovering from an early drop and stabilising at around £655 in late August. Unfortunately, the start of September saw rents drop to £651 after a quarterly high of £659. This region has been fairly stable and robust since the start of the index in July 2011. The next quarter may see further decline, but the average rent is likely to remain at around £650 in the long term.
Yorkshire and Humber
With one of the lowest and most stable average advertised rental rates in Great Britain, a 7 percent increase in Yorkshire and Humber advertised rental prices was unexpected. The average rent is now closer to the rest of the North and Midlands, at around £602 per month, compared to £559 at the beginning of the quarter.
North East
The North East appears to be on the up, recovering from the 4.5 percent decline in advertised rents that took hold in the first half of 2012. The current average rent is £16 lower than the year’s highest point, with the current average at £651. There has been an overall increase of around 0.5 percent since the same period in 2011 and a 2 percent increase from the start of the index.
North West
The North West is experiencing slight increases in average advertised rents, after recovering from a large fall in rental prices at the end of 2011. This quarter has seen a return to rental price growth after a 0.5 percent drop in the latter part of the last quarter. There was a 2 percent increase between July and mid-September, though rents did decline in the last two weeks of the period. The current average advertised rent stands at around £620 per month at the end of September, marking a £17 increase from the previous year.
Wales
The average advertised rents in Wales behaved in a very similar way to the rest of the UK in the last quarter, with sharp increases after a 6 percent decline in the first half of 2012. Wales had the second largest rise in rental price of any region in Q3, with a 5.6 percent increase from £604 to £640 over a three-month period. Rental price levels remained at this level to the end of the quarter, suggesting that this is sustainable.
Scotland
Advertised rental price levels in Scotland have remained below the July 2011 rate for the final part of 2011 and much of 2012. This quarter has been no exception, with a fall of around 1 percent after an initial increase of 1.3 percent. Signs of a recovery in August were dashed by a further 0.25 percent decrease, leaving rents at close to 2 percent lower than those experienced in July 2011 levels and 1% lower than the same period last year. Average rental prices in Scotland, at £657, are £337 below the British average. The current trend suggests a further decline over the coming quarter, though there is the possibility of a slight recovery in Q4 from a higher base than in 2011.
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