As the new academic year gets underway, demand continues to far outweigh supply in the lettings market in London and the Home Counties says Knight Frank.
While new supply was a third below the five-year average in August, the number of new prospective tenants registering was 75 per cent higher, it reports.
And Knight Frank says that for landlords, the clear conclusion is that it won’t become a tenants’ market any time soon. For tenants, there is still a need to move quickly and decisively due to the stock shortage.
While transaction volumes and prices in the sales market remain robust, the agency noted that there is less chance of so-called accidental landlords emerging to redress the imbalance.
“That said, rising mortgage rates will ultimately curb demand in the sales market and create more landlords, although any meaningful movement is unlikely in the short term due to the gradual effect of people rolling off fixed rate deals” says the latest lettings market snapshot from the agency.
“Buy to let rather than accidental landlords may offer a better chance of increasing supply in the short-term” it adds.
Despite uncertainty surrounding proposals in the Renter’s Reform Bill, the extent to which rents have increased over the last 18 months is attracting buy to let investors.
The agency notes that for the moment, rent increases are narrowing as the effect of a large spike downwards at the start of 2021 works its way through the system.
Rental values in prime central London rose 19.9 per cent in the year to August, having fallen from 29.2 per cent in April this year, the highest figure recorded in more than 20 years.
In prime outer London, the rise in August was 15.2 per cent.
And the agency snapshot goes on: “In addition to these inflation-busting increases, real estate is becoming an attractive asset class as other markets appear volatile. Volatility indices have risen since August and one of the reasons the US dollar has strengthened in recent weeks is because more investors are looking for safe-haven assets.
“For now, we would expect the double-digit increases to continue.”