New Properties to Rent Surge by 7% – Biggest Jump in 10 Months
The supply of new UK let properties rose by the highest amount since November 2022, an early indicator that the rental market is heading in the right direction.
According to Rightmove, new rentals on the market increased by 7% in Q3 2023 compared to the same quarter in the previous year. As such, the number of available properties for let grew by 14%.
Rightmove’s Tim Bannister had the following to say:
“While there is likely some way to go before this filters through to rental prices, we could start to see the pace of yearly rent rises slow more significantly than it has been.”
Read on to see how this will affect up-and-coming property areas in the UK in 2023.
What Does This Mean for the Current Housing Market?
Over the last month, the UK rental costs have soared. As inflation and interest rates remain high, renters have paid more of their monthly income on housing.
In Q3 2023, average London rental costs soared to £2,627 PCM, a 12% yearly increase. In the rest of the UK, rental costs increased by 10%, hitting £1,278 on average. For the latest statistics, read our London property market 2023 predictions.
Additionally, the latest data shows that tenants see more people competing for properties than ever. In the last three months, the queue for the average property has increased by 25% to 25 people, making it harder for renters to find properties.
Also, the number of enquiries per flat has tripled since the COVID-19 pandemic.
As a result, rental demand has outstripped supply for some time, arguably creating a rather attractive buy-to-let market.
Knight Frank recently reported that rental growth should continue increasing steadily over the next five years, resulting in a cumulative growth of 22.2%.
However, they also predicted that growth would slow in 2026 and 2027, expecting more manageable inflation and interest rates by then.
How Do Rental Costs and Property Prices Compare?
One of the reasons supply has increased may be due to rental prices outperforming price growth. Due to the cost of living crisis, property price growth has slowed dramatically. However, rents still rise at remarkable levels.
This imbalance could be enough to tempt buy-to-let investors into the market with promises of high yields and good-value properties.
Regions like the North West regularly prove popular with property investors in the UK for that very reason.
Take Liverpool, for example:
The Merseyside city has an average house price of £177,224 (according to HM Land Registry) and an average rental price of £1,058, yielding 7.16%.
The average price is less than the national average, while the average Liverpool rental yield is considerably higher than the rest of the UK.
In addition, the North West is predicted to see an 11.70% capital growth by 2027, promising good returns on property investment in that area. Take a look at our Liverpool Baltic Triangle guide for a detailed breakdown of one of Liverpool’s most promising buy-to-let areas.
With the proper research and due diligence, investors may be able to make the current market work for them – they just need to find the right buy-to-let investments in desirable areas.