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Property Rentals Surpass Sales for First Time in 80 Years

The UK rental market is thriving at the expense of the property sales market, making it appear as if next year house rentals will exceed purchases for the first time since the 1930s, as buyers struggle to find affordable property.

According to Countrywide, the UK’s biggest estate agency chain, sales market activity has lessened since the Brexit vote, and a lack of available properties combined with increasing prices has resulted in more rentals than purchases.

Countryside research director Johnny Morris said that the uncertainty induced by Brexit has boosted the rental market, with record activity occurring in September. More properties were being let and tenants were renewing their contracts.

Separate reports suggest that new home acquisition is increasingly difficult, with prices going up and being deposits being required. Consequently, home ownership dropped to its lowest level in 30 years at the beginning of 2016. Recent mortgage lender figures reveal a slight increase in the number of home purchase loans being taken out, but the number of available properties is at a record low and prices are going up.

Official figures show that in 2015 over a million properties priced at more than £40,000 changed hands. Mr Morris said that over the past five years mainstream rental activity has been gaining momentum.

There was a property boom in March as landlords tried to purchase properties before stamp duty rates changed, leading to an increase in the number of rental properties advertised. Mr Morris added that when informally advertised lets were factored in, the rental market may have already outstripped the sales market.

Property portal Rightmove has detected a north-south discrepancy in the post-Brexit  housing market. Sales prices for new homes have increased for two consecutive months and the north of England has essentially become a “sellers’ market”.

The latest Rightmove report on asking prices indicated that sellers entering the market in October asked 0.9% more than those selling their homes the month before. At present the average sale price for a house in England and Wales is £309,122, which is slightly below the record set in June.

Rightmove said that across the six regions of the Midlands and the north of England, the number of properties offered for sale had decreased by 11% since 2015, providing less opportunity for buyers to negotiate the price.

Miles Shipside at Rightmove said that agents were reporting  energetic sales in several places, especially in the mass-market areas. As long as the house is not excessively priced, the right property in the right area is quickly being bought, even for amounts that exceed the asking price.

In contrast, pricing on available properties in Southern England increased 16% year-on-year, while final sale prices went down by 10%. Sales activity in the Greater London area is believed to have resulted in affordability challenges, as asking prices averaged £645,833 in October, compared with £630,974 the month before.

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