In our client briefing of four weeks ago, we highlighted the extraordinarily high demand for private rental property and emphasised the knock-on effect this was having on rising rental prices.
We will continue to explore rental activity this week, as we now see an alarming lack of supply of private rental properties.
The Difficulty of Finding Somewhere to Live
We know and have been reporting for some time now that there is a real threat that the property industry will effectively run out of homes to sell. If you’re an Estate Agent, right now we would be exceptionally surprised if you have a more pressing concern than the need to get new stock and fast.
It is however only recently that we have noticed the same issue occurring with respect to private rental properties.
From a sale perspective, available properties that are on the market to choose from are at their lowest levels since our databases began.
Perhaps surprisingly, this is also now true of private rental properties as well.
In fact, if we pause for a second to compare now with September 2020, we see that there is currently less than 60% of the stock levels to choose from than there was this time last year.
The following chart displays available stock levels of private rental properties since January 2019, and you can clearly see the lowest month is September 2021.
Lack of Respite
It is certainly the case in the short term that we can’t see this changing very much. There are effectively two ways to have more stock – let fewer properties or increase the number of available properties by getting more landlords to put lettings property on the market.
As far as letting fewer properties go, as we reported four weeks ago, demand is high and shows no signs of slowing.
So, this leaves us with supply being the “white knight”. Extrapolating for September 2021, we believe that new rental instructions are 3% down on the prior month and a whopping 20% down on September 2020 (or for that matter September 2019).
In fact, if we rule out the month of December, as Christmas means that people only really have half the month to think about moving, and if we rule out April 2020 (when we were all in the midst of lockdown 1.0), the monthly supply of new private rental instructions is at its lowest point since our databases began.
This client briefing raises a very serious potential problem.
If people need to move but can’t find a place to buy (which is common), then the private rented sector market has always been available to them in the past. We now have extreme scarcity of supply on both owner-occupied and private rental property happening simultaneously.
With a social housing sector also under pressure and not even an option offered to (let alone considered by) most people, the logical conclusion is that prices for both sale and rental property will continue to rise in the short term.
The continuing story of 2021 continues and escalates – great news for sellers and landlords, but not so great if you are a buyer or prospective tenant.
These client briefings are not intended as sales communications, but if you would like help to obtain more new instructions in this “sellers” market then please contact Katy Billany, (Our Executive Director for Estate Agency Services) at email@example.com.