Rental prices join property values in falling
Monday, 09 Jun 2008 00:01
Rented accommodation prices slump in UK, despite ongoing turmoil from liquidity crisis
Rented accommodation prices in the UK have slumped, despite ongoing turmoil caused by liquidity crisis.
While potential property buyers defer purchases – waiting to see if prices will fall further – and remain in rented accommodation demand for rental accommodation has been on the increase.
As such rent has been peaking at record high levels.
However, this trend appears now to be reversing with the average cost of a rented house down seven per cent, and the average apartment nine per cent, according to new research from the Association of Residential Letting Agents (ARLA).
"We are seeing corrections in individual locations throughout the country," said Ian Potter, head of operations for ARLA.
"The main cause of these is the developments of new blocks of two-bedroomed flats coming on-stream. In many places this has had a positive effect as it has allowed the rental market to provide stability in housing at a time of volatility in the sales market.
"It also demolishes the myth of soaring rent levels. As before in volatile times, the rental market is proving to be the white knight for housing as a whole."
Average rents for a house range from £3,000 a month in London to £931 a month outside the south-east.
For flats, the rental difference is £2,000 a month in central London, £854 in the south-east and £585 a month elsewhere.
However, demand for property still outstrips supply in some areas.
The proportion of letting agents reporting this imbalance at its highest in Greater London and the south-east, followed by prime central London and the rest of the country.
Overall, the proportion of agents reporting more tenants than there are properties available to rent remains at a historically high level of 39 per cent.
In further good news for landlords void periods have continued to shorten. This quarter they have fallen from 24 to 22 days.
Tenants are still staying in properties for longer for an average of 16.3 months against 16.1 months in the previous quarter.
Finally, the average capital asset values of rented houses have fallen by 2.4 per cent in prime central London, one in the rest of London and the south-east and 5.1 per cent in the rest of the UK.