Houses and flats polarise the rental market
Thursday, 28 May 2009 10:08
Flats aren't stabilising as well as houses in the rental market
Houses and flats have polarised the rental market, with houses beginning to show the first signs of recovery.
FindaProperty.com's rental index for May, discovered the average asking rent remained unchanged, despite being 5.5 per cent lower than last year, with signs the rental market for houses and flats were beginning to divide.
A fall in house supply in the rental market was seen for the third consecutive month, as well as a modest rise in rents, while flats continued to suffer from rising supply and falling rents.
Properties were on the rental market for 16 days longer than in May last year, with FindaProperty saying "there are early signs of recovery with monthly rental growth in the south-east, Scotland and West Midlands".
Rental yield fell slightly to 4.56 per cent, with average yields now standing at 4.31 per cent for houses and 5.25 per cent for flats.
Andrew Smith, head of the research, said: "A slowing in the increase of supply and signs that asking rents are beginning to stabilise indicate that we may be close to the bottom of the rental market.
"However, the house and flat markets continue to polarise, with houses starting to show a sustained recovery thanks to falling supply levels and rising prices, whilst the flat market seems to be lagging behind with increasing supply levels and asking rents that continue to fall."
In the capital asking rents were experiencing a rise of 0.4 per cent for May, now standing at £1,630 pcm, compared with the average UK asking rent of £819.
The largest month-on-month increase in rents was experienced in Scotland where a rise of 0.9 per cent took the average asking rent to £693 per month. The west Midlands also experienced a 0.3 per cent month-on-month increase in rental prices, which FindaProperty.com said was partially driven by a 1.9 per cent increase in rents for properties in Birmingham.
"In line with the overall picture of the UK rental market there are some early signs of regional revival, with London and the south-east leading the way in England, and Scotland also experiencing rental growth.
"However, there is still a long way to go until the recovery is in full swing. All of the regions continue to show year-on-year rental declines and a number of regional cities are still registering double-digit falls in price," Mr Smith added.