In today's housing market, rental demand remains robust despite minor fluctuations, notes Alasdair Morrison. Currently, there are approximately 15 households vying for each available rental property. This is more than double the pre-pandemic average of six households per property observed between 2017 and 2020.
Key drivers of rental demand
One of the primary drivers of this strong demand is the labour market. While it has shown signs of slowing momentum recently, the demand for rental properties remains high due to the challenges faced by first-time buyers (FTBs). The increased difficulty in securing mortgages at higher rates has made it tough for FTBs to transition from renting to owning. Consequently, a significant portion of demand for rental properties comes from individuals waiting for mortgage rates to become more favourable.
Additionally, the shortage of affordable homes continues to exert pressure on the rental market in Newark and Southwell. Many households with acute housing needs face limited options, further intensifying the demand for rental properties.
The role of first-time buyers
First-time buyers play a crucial role in the rental market dynamics. Statistics show that three-quarters of FTBs initially come from the private rented sector. However, with the rise in UK mortgage rates since 2022, there was a notable decline in FTB purchases, with a reduction of one-fifth in 2023-4. Despite a slight recovery in FTB activity due to declining mortgage rates in 2024, the demand for rental properties remains strong as potential buyers continue to await more favourable conditions.
Outlook for landlords and property investors
Alasdair continues: while the pandemic-induced factors driving rental demand are gradually receding, the high cost of home ownership and insufficient affordable housing options suggest that rental demand will remain strong across multiple fronts. For landlords and property investors, this presents an opportunity to capitalize on the ongoing demand for rental properties.
Understanding these housing market trends can help landlords make informed decisions about their property investments, and our expert Rentals Team is on hand to help you with considered advice. While the market remains competitive, being aware of the underlying factors driving rental demand can provide valuable insights for strategic planning.
Alasdair finishes: rental demand is currently robust, driven by a combination of labour market dynamics, challenges faced by first-time buyers, and a shortage of affordable housing. For landlords and property investors, staying informed about these housing market trends is essential to make strategic decisions and capitalise on the strong demand for rental properties.
To stay updated on the latest housing market insights and trends across Newark and Southwell, follow our blogs for regular updates. If you have specific questions or need personalised advice, don't hesitate to reach out to our team of rental experts. We are available via email: rentals@amorrison.co.uk or by phone 01636 670977. We look forward to speaking to you.
