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TODAY'S OTHER NEWS

Is there room for growth in rent prices once the lockdown is lifted?

With renters, landlords, buyers, and sellers being advised to delay their home moves if possible and not to allow new viewings, the housing market has unsurprisingly ground to a halt. 

New property listings have plummeted, transactions have nosedived, and prices are expected to drop sharply, as the lockdown imposed to curb the spread of the Covid-19 virus has a detrimental impact on the housing market.

Prior to the existing crisis, the market looked in good shape and showed considerable potential for growth this year. 

Confidence was returning, prices were increasing and momentum was on the rise, with the mix-adjusted average home price for England and Wales growing to 1.8% year-on-year; the highest such growth seen for two years. But this has now dropped to 1%, and is likely to fall further. 

Low and falling stock levels will have a negative impact on the sales market, while also impacting on the Private Renting Sector (PRS). 

The letting market has seen stock levels drop 14% year-on-year, with 21% fewer new rentals now entering the market. 

This squeeze in supply is having a dramatic effect on rents in many regions. Rents in the Greater London area are now up 9% year-on-year and some boroughs are seeing annualised hikes of around 20%, according to Home.co.uk

We do not yet know when the market will have the all-clear to proceed, but, when it does, the imbalance between future supply and demand could have clear implications for significant upward price adjustments. 

Poll: Do you think rents will rise once the lockdown restrictions are lifted?

PLACE YOUR VOTE BELOW

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    Maybe yes and maybe no. Who knows? Not even the experts. None of the financial experts predicted the banking crisis of 10 years ago. None of the medical experts predicted such a pandemic and its effects. Maybe by the time this is all over and the economic situation is so much worse, people just can't afford the property prices of just a few months ago, so they may fall. No-one knows.

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    • 17 April 2020 16:25 PM

    The MMR need to be abolished to enable affordability.
    95% IO fixed interest or tracker mortgages over 60 year terms are needed with NO penalties for overpaying as much of the mortgage as desired.

    C & R mortgages are simply constraining purchasing power.

    There will be mass unemployment especially as all those zombie businesses that should have gone bust during the CC will go bust now.
    Lenders will have to cancel MMR if they ever hope to get mortgages out of the door.

    Having such changes applied to residential purchasers would facilitate competition between LL and homebuyers.

    I would restrict LL to no more than 50% LTV mortgages.
    That would give homeowners a competitive advantage over LL.
    With such restrictions for LL then Govt should abolish S24 and the SDLT surcharge.

  • Kristin Novak

    My bet is on "no", and think it is overoptimistic to expect that they would even remain the same.Demand is down, renters have choices, and some owners are now staging (!) even low end rentals. If anything, the prices will have to decrease to gain at least some competitive edge, or will sit empty. Central London flats seem to be getting cheaper too, at least to me. I wish to be wrong though.

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    Although, counter to that, it was reported on the radio that rentals in Bristol are booming and that it is almost impossible to find anything available.

     
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    Depends where, Norwich is doing well at present.

     
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