The property market is back in action. Last week, the British Government announced that people could once again view properties following a market standstill in March, due to the Covid-19 lockdown.
Almost 11,000 new sales listings have been put on the market since the first day of reopening, Rightmove said. Rightmove is the UK’s largest property portal and a listed company on the London stock exchange.
Despite this impressive number, the total available stock for sale is down 2.5% since before the lockdown — further dampening supply in a market that is already saddled with a backlog of 4 million homes.
Growth in Rental Demand & Values
Meanwhile, the average asking prices of properties up for sale across the UK are up 2% on last year, with the current average value standing at £311,828.
Demand for rental property has also gone up by 33% compared to this time last year, when there was still no certainty on Brexit and the UK General Election results.
On Monday (18 May), Rightmove saw the highest level of rental demand ever recorded in one day!
Landlords will be pleased to know that asking rents have also gone up 2.1% compared to 2019, which on average is £1,089 per calendar month.
The biggest increase in buyer searches compared to last year are in Manchester, Liverpool and Leeds.
Rental Demand is Here to Stay
For a while now, we have talked about the growing trend in private renting — more people are renting, and they are renting for longer periods.
And this may surprise many, but the demand for rental properties is not just increasing among the younger generation. In fact, the fastest growing demographic renting their homes are those from 45 to 54 years of age, according to the latest data from the Government.
With this growing trend in people renting, right now this is a great time to be a landlord.
The current Covid-19 uncertainty also makes now the best time to invest, thanks to the advantages that arise from affordable currency and interest rates.
“This is the time to act, and take the long view,” said Liam Bailey, the head of global research at Knight Frank during a global prime residential markets webinar held on Thursday (21 May).
“The period of uncertainty is the best time in terms of investment strategy…The fundamental strength of the economy is what will drive the housing market and it will reassert itself,” he said, citing a prediction of 7.3% GDP average growth forecasts for the UK in 2021.
To further illustrate, in 2007, just before the last major financial crisis, many people were confident that then was a great time to buy, and that the property market was never going to go down in value, or stop its significant run.
If you had followed the crowd then, you would have bought at a bad time.
Two years later, when the market started to recover, the general sentiment was that it was the worst time to invest in property and that there would be no returns. It was, in fact, a great time to buy.
The fundamentals of the UK economy and property market have been strong, and the current crisis has done little to change that.
As a general rule of thumb, if you buy desirable property in great locations, they will rent well; and if you can hold them long-term, they will grow in value.
As Warren Buffet, a great investor, once said, “Be fearful when others are greedy and be greedy when others are fearful.”
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Article by Ian Choong, Edits by VP