Supply up and demand down in the lettings market...except in London

Posted 28 August 2015 by Stephen Maunder

Supply is on the up in the lettings market, with agents managing an average of 189 properties per branch in July, compared to 178 in June, according to a new report by the Association of Residential Letting Agents (ARLA).

Demand in the market decreased slightly last month, with the number of tenants registered per ARLA branch down from 36 to 35 in July. This decrease could be attributed to the quieter summer months, but shows a step in the right direction in terms of balancing supply and demand. London, as ever, is the exception, with 40 prospective tenants registered for each branch in July, an increase from 36 in June.

A third of ARLA agents (35%) expect the supply of rental properties to continue increasing over the next five years, with those in the East of England most optimistic, where 53% of agents predicting that supply will continue to rise. The case is different in the South West, where only 15% predict continuing growth in terms of housing stock. Rent costs, meanwhile, continue to increase, with 37% of agents reporting increases this month - the highest percentage since January. 

David Cox, ARLA managing director, said: “To finally see a rise in available rental properties is definitely a step in the right direction; although with demand remaining the same, we still have a long way to go in achieving a balanced and stable private rented sector. Following the changes to pensions made in April, the fact that a third of agents are predicting supply will continue to increase over the next five years could be a result of people releasing equity from their pensions to invest in the buy-to-let market. 
 
“It’s clear from this month’s findings that the growing gap between supply and demand is an issue still rife in the capital; which doesn’t look to be improving any time soon. With the cost of renting continuing to rise month by month, it’s a worrying state of affairs for those hoping to save for their first house and just pushing the aspiration of owning a home further out of reach.”

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