Real Estate: London Faces Supply Shortages in The Prime Letting Markets - Richard Oyamo reports
As different countries welcome the vaccination against the raging Covid-19 pandemic, many businesses are expected to bounce back to their feet. One of the highly profitable markets that are likely to resume is the rental market. This is after a successful vaccination program in the UK that has impacted an increase in demand for rental properties by the office executives, as reported by the International Property Consultant Knight Frank. However, is the impact similar in the supply curve?
While the rental property demand is increasing, the case may not be the same in the property letting markets. London's prime locations have experienced an over-supply of rental properties as the letting sector continues to diminish. This is after the property owners switching to the sales markets in the fear of the uncertainties with the coronavirus. For instance, the UK has recorded another year of high transactions in the sales market last month, marking fifteen years in a row. The effects can be also be felt by the Premier League footballers as London’s rental market celebrates over £5000 in a week.
What Is the Situation in The Corporate World?
The UK economy is gradually opening after the third national lockdown that had rendered many businesses helpless. Consequently, more relocation agents representing senior international executives moving to the UK are now searching for houses costing between £2000 and £4000 per week. According to the statics, the number of agents looking for houses is now four times higher than what was recorded in April last year during the first lockdown. However, they face similar shortages as the supply sector is expected to experience more pressure over the traditionally busy months ahead.
The most affected by the shortages of houses are the European and North American families whose parents work in finance and tech. sectors. Moreover, the locations with high demands include Hampstead, Notting Hill, Kensington, and parts of Home Counties. As a result, the number of house listings recorded in March 2021 dropped from 532 to 286; that is a 46.2% decrease compared to the same month last year across London and the Home Counties. Unfortunately, the Home Counties took the heaviest blow when the listings of houses between £2000 and £4000 dropped from 36 last year to 6 this year.
What Does the Future Entail?
John Humphris, who is in charge of relocations and corporate services at Knight Frank, predicts that property owners are likely to hike rents on most in-demand properties for the coming months. This is due to the decrease in the rental values by 14.3% as more short-let properties enter the sales market. Those looking for letting properties should expect more supply shortages and higher rents this summer due to stiff competition for the best properties. This means only one parent can live in a permanent house for the time being, while others may opt to broaden their search or rent properties below their budget.
(Editor: Richard Oyamo)