Landlords with property in Outer London and the East Midlands are reporting the strongest levels of tenant demand in Britain, Paragon Bank research has revealed.
The research of 983 landlords, carried out by BVA BDRC, showed 91% of landlords reported rising tenant demand in outer London during the second quarter of the year, with 67% reporting demand grew ‘significantly’. In the East Midlands, 86% of landlords reported rising tenant demand, followed by Wales at 82%.
The weakest region for tenant demand was the North East, with 69% of landlords recording an increase in demand. Overall, 67% of landlords across Britain reported increasing levels of tenant demand during the second quarter, unchanged from the first quarter and an equal record high. Only 2% of landlords reported falling levels of demand.
The survey highlighted that strong demand was leading to rent increases – 87% of landlords said rental prices were increasing in their local market, with 51% stating that they planned to increase rents across their own portfolios within the next six months.
Landlords with properties in Wales (94%), the North East (92%) and Yorkshire & Humber and East Midlands (on 91%) were most likely to see rent increases in their local market.
Paragon Bank Commercial Director of Mortgages Louisa Sedgwick says “tenant demand shows no signs of slowing down in many parts of the country. With supply not growing quickly enough to keep pace, we are seeing rental inflation and that is likely to continue until we see demand more in balance with supply.”
Typical buy to let sold 25% below wider market price - Zoopla
Zoopla says a buy to let property sold off by a landlord is “typically priced 25% lower than the wider housing market.”
In a market snapshot the property portal say that landlords are being squeezed by higher mortgage rates, and that as a result mortgaged buy to let units make up around 8% of property sales in the UK. But it warns that BTL investors in southern England now need to have equity of 40 to 50% of the property’s value to get the numbers to stack up and as a result, it forecasts that new investments will be lower this year.
The snapshot says “with more landlords selling previously rented homes, there is more supply of homes that appeal to first-time buyers. These are typically priced 25% lower than the wider housing market.”
The portal recently revealed that the sales market in 2023 was likely to be the quietest for over a decade with transactions set to be 21% below the 2022 level. Over the end of the summer demand for homes was running 34% lower than the five year average, while sales agreed were down 20%; meanwhile supply was rising with listings up 16%.
Based on trends during the first half of the year, Zoopla predicts that cash sales will fall just 1% this year while the number of mortgaged sales is projected to be a whopping 28% lower.
Zoopla’s research executive director, Richard Donnell, says “house price growth has slowed rapidly over the last year as demand weakens in the face of higher mortgage rates. Prices are falling more in southern England where higher mortgage rates have priced more people out of the housing market, weakening demand. While UK house prices are 0.1% higher over the year, it is the number of sales that have been hit hardest by higher borrowing costs, especially amongst mortgage reliant buyers. Cash buyers are more immune and on track to account for more than one in three sales in 2023. Mortgage rates have started to fall slowly but rates need to fall below 5.0% before we see an increased appetite to move home in the second half of 2023.”
Northern cities are UK property hotspots, says new report
The cities of Liverpool, Nottingham and Manchester have enjoyed the biggest house price rises since pre-Covid. Despite interest rates at a 13-year high and a fairly flat current market, cities have enjoyed healthy price rises since January 2020.
New research by Zoom Property Buyer reveals the biggest increases in a league table of UK cities….and London is bottom of the pile.
House Price Increases in the UK’s Top 10 Biggest Cities from January 2020 to June 2023
Liverpool: 40.92%
Nottingham: 32.11%
Manchester: 27.52%
Glasgow: 27.51%
Leeds: 24.39%
Newcastle upon Tyne: 23.65%
Sheffield: 22.23%
Birmingham: 20.98%
Southampton: 18.31%
London: 10.93%
Across the UK, some surprising results emerged.
Despite the reputation of the South for expense, it was the North West region that saw the largest hikes in house prices.
North West 34.22%
East Midlands 32.11%
Scotland 27.51%
North East 23.65%
Yorkshire and the Humber 23.31%
West Midlands 20.98%
South East 14.62%
Northern cities are UK property hotspots, says new report
Zoom Property Buyer’s Mark Hardman said "these findings provide a comprehensive view of the UK property market, highlighting the diverse growth patterns across cities and regions. It’s unclear how these trends will continue in the wake of instability in the property market but the impact of the post-pandemic economy has seen increases of up to a third in some parts of the country.”
The findings also underscore a prominent North/South divide in the UK property market - but not as you might expect.
While cities in the North such as Liverpool and Manchester have seen the most significant growth, London still remains the most expensive, with average house prices reaching over £500,000.
Northern cities are UK property hotspots, says new report
Methodology Based on a review of average house prices in each city month-on-month between January 2020 and June 2023. Data from HM Land Registry.