The nation’s rental market could be in for a boom as historic housing market trends show that a decline in property sales also leads to a boost in the private rental market stock.
That’s according to Alliance Fund, the end to end real estate fund, which analysed both the sales and rental markets during the economic downturns seen during the Great Recession of the 2008/09 financial crisis and the more recent downturn spurred by the Covid pandemic.
Their findings show that in 2008 when the Great Recession hit, property sales volumes across England fell by 49.3% on an annual basis.
They then continued to fall by a further 3.1% the following year before rebounding by 6.4% in 2010.
Level of privately rented stock available to tenants across England
At the same time, the level of privately rented stock available to tenants across England rose by 8.2% in 2008, an increase of 261,474 rental homes in a single year.
This was followed by a further 7.6% annual increase in 2009, with the addition of a further 261,264 privately rented homes pushing the size of the PRS to a record 3.705m homes.
When the initial market uncertainty of the Covid-19 pandemic hit, the level of homes sold across the property market in England also took a hit, falling 15.9% in 2020, by far the largest annual rate of decline seen since the Great Recession.
In contrast, the growth rate of the private rental sector had been showing a steady decline since 2009 and, since 2017, had been reducing in size until 2020.
However, when the Covid market downturn hit, the level of privately rented stock available across the market increased by 1.1% in a year, the first increase since 2016.
Private rental market has increased
When analysing the market over the last two decades, the research by Alliance Fund shows that sales volumes have increased at a rate of 4.7% per year when the market hasn’t been blighted by an economic downturn, whilst the private rental market has increased by an average rate of 4.1%.
In contrast, during periods of economic instability, sales volumes have fallen by an average of 22.8% per year, while the rental market has grown at an average annual rate of 5.6%.
The CEO of Alliance Fund, Iain Crawford, said: “The jury is still out with respect to the current turbulence plaguing the property market and just what impact this will have in the long-term on the ability of homebuyers to secure mortgage finance, as well as the knock-on effect to house prices if they can’t.
“However, historic market trends show that should the housing sector take a hit, the nation could be in for a rental market boom, as more and more of us remain reliant on the private rental sector in order to keep a roof over our heads.
“This reduction in buyer demand will come as a worry to those investing and delivering new housing stock to the market, as they simply won’t be able to capitalise on the same level of opportunities available to them in a buoyant market.”
Tenants queue overnight at lettings agencies
University students have queued on the street overnight to secure a home for next year in one of the UK’s most popular cities for higher education.
A BBC report shows that hundreds of students lined up outside lettings agency offices in the city after lists were released in a process known locally as ‘the drop’ – when much of the city’s accommodation for the academic year is listed at the same time.
As has been the case for many decades, first year undergraduates have guaranteed university-managed accommodation but have to find their own housing after that. Durham Students’ Union described the housing market in the city as “broken” and claimed increasing student numbers were “putting students’ welfare, and education, at risk”.
The BBC report says queues started to form at lettings agency offices at 7.30pm on the evening before the release of the accommodation; footage from the BBC and other TV services show students with bedding, and in some cases camping in shifts with housemates.
Engineering students Tom Richardson and Peter Thorne told BBC Look North they had queued for six hours for a house and still did not have a room confirmed.
Richardson told the corporation: “I think it’s quite simply there’s too many students and not enough houses. We decided to get up at about half three, get there for four and then queue straight the way through.
It was absolutely manic – people had camping chairs, tables set out, loads of blankets – by the end, when people started moving it looked like a dump site.”
Thorne added: “We had people last week coming to our house saying ‘we have already signed your house, we queued since 5am’, and they had no choice but to sign a house in a panic basically, without even looking at the house. I think it’s terrible for the first years – the first two years for us were very easy to try and get a house and now it’s just such a change, it’s been quite bad, we still haven’t found one but we are hoping for the best.”
The university told the BBC that it had “engaged in a dialogue” with local letting agents and was in touch with the county council.
“The exceptionally early rush for accommodation was unexpected, and we have been working rapidly to communicate with and offer additional support to our students on this matter,” a spokesperson said.
The university added that it had “experienced exceptionally high demand” for university accommodation, blaming a higher student intake post-Covid due to “unexpected national shifts” in the grading of exams.
