New Statistics Show High Rental Demand for 2023
Patrick Faulkner
RWinvest Property Writer
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The high rental demand that characterised the UK property market for much of last year looks set to continue throughout 2023, heaping further pressure on the growing imbalance between supply and demand for rental accommodation.
While many perceptions of the UK market currently present it in a negative light, experts suggest that a combination of high rental demand, along with a brief drop in average property prices could present a unique and potentially lucrative opportunity for investors in 2023.
Supply & Demand
The number of people currently enquiring about homes to rent has risen by roughly 23% since last year, while a recent Zoopla report highlights that rental enquiries per estate agency branch are 46% above the 5-year average.
On the other hand, the current stock of homes for rent is 38% below the average of the past five years and 4% below what it was in November 2021, highlighting the supply gap that the UK currently faces.
In many cases, this has resulted in lets being agreed upon before viewings have even taken place and instances in which potential tenants are forced to outbid each other in order to secure a place to live. Inevitably, these trends have caused a sustained increase in rental growth across the UK which peaked at 12.3% in July of last year.
The continued demand and supply imbalance, as well as an increase in rental value growth, is fuelled partly by a reluctance of first-time buyers to enter the market, which stems from a number of factors including the ongoing cost of living crisis and fluctuating mortgage rates.
Cost of Living and Rental Demand
In a recent report, property experts Savills highlight that although inflation has now likely passed its peak, it is still expected to be above the 2.0% target at the end of the year, while average incomes remain below that which makes housing affordable in the current market.
This, among a number of other growing financial pressures including rising fuel costs, has made potential buyers much less likely to commit to taking out a mortgage, with many choosing to continue renting at least until the economic situation improves.
Experts believe that this will have a significant impact on sustaining these high levels of rental demand throughout 2023. A recent Aviva report suggests, for instance, that up to a million people may rule themselves out of the first-time buyer market in the coming months due to pressures caused by the cost of living crisis.
High Mortgage Rates
The recent fluctuation in the rates of UK mortgages has also had a significant impact on rental demand across the country. Driven up by market instability following last year’s controversial mini-budget, mortgage rates have stabilised, albeit at a higher level than those witnessed in recent years.
The Bank of England, for example, is set to raise its base rate to 4.25% in the coming months. Although this is slightly lower than what some experts predicted, a continued sense of uncertainty will persuade many first-time buyers to continue renting until mortgage rates stabilise and become more affordable.
Investment Perspective
Although this is an undeniably frustrating time for first-time buyers attempting to purchase their first home, 2023 offers a unique and potentially lucrative opportunity for property investors.
With some experts predicting price falls of up to 8% this year and demand for rental accommodation forecast to increase further along with rental growth, 2023 could be an opportune time to invest in buy to let property for anyone with the financial means to do so.
Interested in investing in UK property in 2023? Contact us today to discover our lucrative range of buy to let investment opportunities in top locations.
Patrick Faulkner
Patrick is a property content writer at RWinvest. Keeping a close eye on the UK property market, Patrick helps our readers stay informed and up to date on the latest market news and statistics.
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