Residential Rental Sector Sees Summer Cooldown

Private Rental September 1st, 2015
Residential Rental Sector Sees Summer Cooldown

A recent report from the ARLA has shown that the private residential rental sector has experienced a summer cooldown.

The reported statistics from the ARLA (Association of Residential Letting Agents) provide a change from the usual reports, where demand has tended to outstrip supply. This has been the trend for the past few months and the report may be an indication of a cool down in the residential rental sector, which has recently been reported to be booming to such an extent that some analysts have predicted an oncoming bust.

The report shows that letting agents for the residential rental sector managed an average of 189 properties per branch, compared to 178 in June, representing an increase of almost 7%. Meanwhile, demand across the UK decreased, with an average of 35 prospective tenants instead of the previous month’s average of 36.

The cooldown appears to only be short-term as a result of the summer holidays. It is not believed to be a return to a more sustainable equilibrium within the residential rental sector.

However, although these figures may indicate a short-term rise in the supply and perhaps a cooling of the buy-to-let boom, the long-term prospect shows that this is, in all likelihood, continuing to follow the trend of demand outstripping supply. Demand in London has continued to rise, with over 10% increased prospective tenants registered per branch in July (a rise to 40 from 36). Furthermore, this short term equilibrium in the market is not enough to balance supply and demand. One month of reduced supply/demand is not enough to reduce the rate of house price and rental price growth that have been occurring at such high rates within the past year.

The report attributes the increase in supply to the quieter summer months, where many are on holiday and more concerned with other matters than finding a tenancy. The fact that the summer had no effect in the capital signifies how much of a gap there is in that region between supply and demand. It can be predicted that, after summer, the nationwide trend will return to demand being higher than supply and prices will continue to rise at similar rates to previous months.

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