Thu, 13 July 2023 | Market update
It's impossible to go through a newspaper or watch the news these days without stumbling upon alarming stories about the property market, rising interest rates, and mortgages. While it's true that our financial landscape has undergone significant changes, let's not forget that there are still plenty of reasons to be optimistic and numerous opportunities available for landlords and investors.
Opportunity on the Horizon
One encouraging aspect is that the key indicators in the sales market are gradually returning to levels last seen in 2019, indicating a potential opportunity on the horizon for investors. Additionally, it's worth noting that the current Bank of England base rates, while the highest since 2008, signify a strengthening economy.
According to a recent Rightmove report, some agents have encountered sellers with unrealistic expectations who insist on setting high asking prices. In many cases, this leads to price reductions shortly after marketing the property. Interestingly, there is a noticeable difference in behaviour between non-reduced properties and those that have been reduced. Non-reduced properties tend to have a higher likelihood of securing a sale, demonstrating that buyers are paying close attention to newly listed properties and are willing to consider price reductions.
Reduced properties may take longer to sell and could potentially be sold for less than the original recommended marketing price. However, this presents an excellent opportunity for investors seeking to expand their portfolios and cater to the ever-growing demand from tenants.
A Healthy Market with Potential
Segmenting properties based on demand provides valuable insights. In 2023, approximately 56% of listings receive an email enquiry within the first week, which is still a significant proportion. Although slightly lower compared to 2022, this figure remains higher than the range of 40% observed from 2017 to 2019. This indicates an opportunity for Buy to Let investor to be reviewing the other 44% of the market and taking advantage of any deals currently available.
Pricing as a Priority
Moreover, the timing of demand influences the likelihood of price reductions. Listings that receive enquiries after the first week have a higher chance of experiencing reduced prices. While this may pose challenges, it also presents an opportunity for Investors to negotiate favourable deals.
Robust Rental Sector
In the rental market, asking price growth has responded differently to the challenges faced by the sales market. Nonetheless, it's crucial to highlight that demand per rental property has increased by an impressive 162% compared to 2019. This heightened demand signifies a robust rental market with abundant opportunities for landlords to secure tenants and generate consistent rental income.
We have seen renters adjusted their search behavior, expanding their rental search areas and prioritising keywords such as "Bills included," "Pets," and "Gardens." These adjustments create opportunities for landlords to cater to these preferences and attract potential tenants. By adapting to these changing trends, landlords can maximise the potential of their rental properties and meet the evolving needs of tenants.
Turning Challenges into Opportunities
While landlords face concerns regarding regulation, legislation, and compliance, these challenges also create opportunities for professional growth and development. Smaller portfolio landlords may find it advantageous to maintain their current number of rental properties, ensuring stability and familiarity. On the other hand, larger portfolio landlords can leverage their expertise to expand their portfolios and capitalise on the high demand for rental properties.
Considering the persistent inflation and high base rates since 2008, it's expected that properties For Sale will see the pace of asking price growth continue to slow down. However, this also means that major price falls are not predicted based on the current market activity.
Staying Ahead of the Curve
In the rental market, landlords can benefit from expert support and advice to navigate the increasing complexity brought about by legislation and compliance. By seeking professional guidance, landlords can stay ahead of the curve, ensure regulatory compliance, and optimise their rental property investments.
In summary, the sales market has demonstrated resilience in 2023 and is steadily approaching activity levels observed in 2019. Despite the challenges posed by inflation and high interest rates, it's essential to recognise the enduring demand that exists in the market. Although stock challenges persist, they also create opportunities. For landlords, successfully navigating the growing complexity of the rental market is possible with expert support and advice. By staying informed and adapting to market trends, Investors and landlords can make the most of the current property landscape.
If you'd like to discuss this report further with one of our specialist agents, you can contact your local office here.