As the days tick on from May 13th, the reopening of the market, the impact of Coronavirus on the property market is becoming more and more evident. If you are a regular reader of Elavace’s popular market reports, you will have become highly informed in recent weeks as to how the UK economy is set to respond, and the opportunities this presents to property investors.
Elavace has reiterated on numerous occasions that despite the widespread economic challenges ahead, the impact this will have on the property market is unmistakable. There are articles available on the Elavace website covering how and why unemployment is destined to rise and the inevitability of a shift in demand for rental properties. At this stage, with all the evidence and findings released each day, time is the only factor standing in the way of this shift. When Chancellor of Exchequer, Rishi Sunak begins tapering off the furlough scheme, we expect this to be the stepping stone towards an economic downturn.
From the findings that have been released this week, the property market is more than living up to our expectations which makes to be a perfect time for cash investors to climb up the ladder. Homelet provided data on the rental market suggesting that average annual rents increased last month following the market officially reopening. Typical rents across the UK had shot up by 2.7% last month when compared to that of May 2019, with the average rents reaching highs of £959 per month.
It's important to note that these figures vary from region to region. Up until recent years, the property market in the North has been overshadowed by that of the South. Properties in and around London rose in price so aggressively that they eventually priced out many investors and homeowners.Thus a large portion of these buyers decided to follow the money and move their investments further afield to the North of the country for lucrative rental yields and stronger capital gains. Elavace recognised this movement in market activity and after conducting a vast analysis on the northern regions went onto specialise their portfolio specifically to the North-west which was highlighted as the number 1 region for their investors and partners to maximise their investments.
According to Homelet, annual rents rose in 10 out of a possible 12 regions last month. The only two regions to have fallen when compared to May 2019 were Northern Ireland (-2.1%), and unsurprisingly, GreaterLondon (-0.2%). It will come as less of a surprise that the region to have recorded the highest annual rental growth was the North-west, increasing by a resounding 7.5% between May 2019 and May 2020!
On a monthly basis, the figures from Homelet had an equal split with six regions recording growth between April and May and the other six regions showing a decrease in prices. The highest monthly rise was recorded inScotland at 2.56%, meanwhile, once again, the biggest drop was recorded in Greater London at -4.26% between April and May.
As previously mentioned, markets will differ between each region, so despite the average UK rent rising to £959 per month in the space of a year, this isn’t representative to every region. Especially if you consider how out of touch London property prices are to the rest of the UK. In fact, the data shows that average rents in London (£1,598) last month were staggeringly67% higher than the UK average, or 99% higher than the UK average excluding the capital city (£803). This UK monthly average (with the exclusion of London) has risen from £776 in May 2019.
The Homelet Rental Index is based on actual achieved rental values for just-agreed tenancies as of last month. This provides us with a key insight into how the lettings market has been impacted by the pandemic, and it seems clear that the shift in demand has already had a positive effect on prices. "The Index returns this month on the back of a marked pick-up in the number of new tenancies agreed during May, providing a forward-looking view of actual rents being achieved," explains Martin Totty, HomeLet's chief executive. Investors with cash ready to go need to act accordingly and get in touch with an Elavace specialist who can guide you through our highly sought-after built property portfolio with tenants ready and waiting to move in!
