The Property Rental Market for Houses is showing signs of recovery while flats lag behind


After more than a year of financial instability and downturn in the property market, the property market in UK has finally started to show signs of improvements. The property lettings market has started to show initial signs of stabilisation. Houses seem to be stabilising faster than flats but overall this is nevertheless a a positive result.

Houses in particular are starting to show the first signs of recovery. The property lettings index for May published by one of UK’s leading property portals has shown that the property rental market for houses and flats are showing a divide. For the 3rd month in a row, there has been a fall in the supply of houses in the rental market. The same period has shown a slight rise in average rent of properties in UK.

In contrast to this, there has been a rise in the supply of flats and at the same time rent of flats have fallen.

Property analysts in UK are unanimous in their analysis that the property lettings market in UK have started to show initial signs of recovery. The monthly rental price has risen especially in the south-east, Scotland and West Midland regions of UK.

The overall Rental yield fell a little to 4.56 per cent and the average rental yield now stands at 4.31 per cent for houses and 5.25 per cent for flats.

The growth rate of supply is now falling. Asking rents have started to stabilise. This indicates that we may be close to the bottom of the rental market. The main reasons for the divide in the rental market of flats and houses seems to be falling supply of houses in the rental market and rising prices. In the case of flats thing are different. The flat market seems to be lagging behind the house rental market with increasing supply levels and falling asking rents.

In London things are a bit different to other parts of UK. Here the asking rents were experiencing a rise of 0.4 per cent for May, now standing at £1,630 pcm, compared with the average UK asking rent of £819.

Scotland is another area faring above the UK average. In Scotland there has been one of the largest month-on-month increase in property rents. Here there was a rise of 0.9 per cent which has taken the average asking rent to £693 per month. Another area where the property rental market has benefited form increase in rents is west Midlands which witnessed a 0.3 per cent month-on-month increase in rental prices.

The overall UK property rental market is certainly showing initial signs of revival, with London, the south-east and Scotland leading the way in overall rental growth.

All in all there is still a long way before the overall property market can make a full recovery. While some regions as discussed above are showing signs of recovery, most other regions in UK continue to show rental declines from previous years. A number of regional cities are still registering double-digit falls in price.