Though it comes at a very strange time, and for a set of very strange reasons, the UK property market has never been so alive.
This is because the rental market is experiencing a boom, which is fuelling a boom in the buy to let sector, which could have the potential to finally breathe some life into the market as a whole.
But, of course, the London and south west don’t need mouth-to-mouth; prices have been rising here since mid-2009 and prices and rents are growing the strongest there in this boom. But in the rest of the country prices have mostly been either falling or stagnating since 2007. Sure, reports throughout showed all indices showing UK house prices rising, but the consensus of opinion is that this growth was driven by exceptionally strong growth in the south, and only a slightly better performance in the rest of the country.
Thank fully the same cannot be said of the rental market; in fact according to the latest LSL Property Services (parent company of Reeds Rains and Your Move) buy to let index rents rose in all regions in September, for the first time on record. According to the index, which is based on a representative sample of 18,000 properties across the UK, the average rent in England and Wales rose by 0.7% to £718 per month, surpassing the previous record high of £713 in August 2011. Rents in London grew by 5.2%.
That the UK rental market is booming is hardly surprising; because house prices never fell as far as expected, and because, of the few first time buyers with credit immaculate enough to get a mortgage, most can’t raise the deposit they need to to be able to afford a mortgage on a house in their area. When first time buyers can’t buy, they rent, and this is on top of the thousands of people who lost their homes to the credit crunch and were forced into renting.
Landlords across the country have been reporting unbridled growth in demand for several months now, and the banks have been increasingly willing to lend to the buy to let sector, offering a range of new products to cater to their needs. It is ironic that buy to let should be seeing such increased lending, when many people were quick to call its permanent demise at the height of the financial crisis, but anyway…
Most residential property investors in the UK with capital to invest are currently increasing the size of their portfolio. At the same time we have wealthy buyers from around the world buying up prime assets in London, because they are a safe asset against the world’s financial volatility and currency devaluation, and also because of the rental demand and subsequent investment potential. In short: the UK property market is alive.