As the sales market slows, the rental market is booming following financial uncertainty.
It’s safe to say 2022 has been a busy year for property. We’ve seen multiple budget announcements, energy rate rises and mortgage rate rises which have all come at a difficult time for household finances. Many of these changes have made it harder for households to afford to buy a property. Especially teamed with the increasing property prices which we saw earlier in the year, which came as welcome news to many sellers.
As the year comes to a close, buyer demand has fallen to levels we’d usually expect to see around Christmas. There are already expectations that we will see further interest rate rises from the Bank of England in 2023 and this, teamed with inflation, has many people worried about property prices.
So we take a look at the current sales and rental market and look at predictions for the future. 2023 is set to be an interesting year…
The number of people enquiring about homes to rent is up 23%
First-time buyers are some of the hardest hit by mortgage rate rises. Many first time buyers are therefore looking at the rental market as a short-term alternative. The number of smaller rental homes on the market is 4%*** lower than last year so choice is limited. According to a Rightmove survey, four in ten first-time buyers with plans to buy in the next few years have already got their total deposit saved. They are very likely waiting to see if mortgage rates drop before they decide to purchase a property.
What’s the latest with rental stock in the lettings market?
The lettings market is stock-strained and agents are reporting around 36 enquiries per property on average. This increases the competition between tenants and means that some high-demand rental properties are fetching higher rents than anticipated.