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Rental property market increases 88%- Globrix

Thursday, 26 February 2009 3:15 PM

Globrix, the UK's biggest property index, has found an 88 per cent increase in the number of new rental properties coming onto the market.

The property search engine said 53,547 new properties came onto the market in January, compared with just 28,489 in December 2008.

Globrix said desperate homeowners, unable to sell their properties in the current economic climate, have been flooding the rental market since the beginning of the year.

The figures for February are similarly high, with the number of new rental properties already 40 per cent up on December 2008.

The over-supply in the rental market has caused prices to fall, with Globrix noting average monthly rent in February at £795pcm, compared to a peak of £950pcm in May 2008.

Daniel Lee, CEO of Globrix, said: "With the number of new rental properties coming onto the market rising dramatically since the beginning of the year, the decline in rental values that began in the second half of 2008 has accelerated and is likely to get worse as supply continues to outstrip demand.

"This sudden surge in new rental properties is a result of the restricted availability of mortgages, the lack of buyer confidence and the dramatic slump in property sales in the second half of 2008.

"What we're witnessing could be seen as a last-ditch attempt by thousands of worried homeowners to try and survive the worst economic climate in living memory and still have a property to show for it once we come out the other side."

Those cities with the largest percentage increase in new rental properties coming onto the market in January were over triple some others, with Cardiff seeing a 244 per cent increase, while Liverpool saw just a 68 per cent rise. The cities with the largest percentage increase month on month from December to January, were:

Cardiff 244%

Cambridge 231%

Hull 216%

Coventry 211%

Bath 198%

Mr Lee added: "Many homeowners, worried about losing their jobs and struggling with debts accrued during the good years, are renting their properties and downsizing or moving to less expensive areas to hedge their bets.

"Unfortunately, while tenant demand is still high, it is nowhere near high enough to keep up with the avalanche of new properties flooding the market. Oversupply in many areas means tenants can demand better quality for less money and average properties are unlikely to find tenants, putting even more financial pressure on homeowners who are already struggling to pay their mortgages."

FindaProperty noted a similar increase in rental supply today.

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