Strong evidence is emerging that Scots are opting to rent rather than buy because of the concerns with the property market, according to latest research by Scotland’s leading online letting portal Citylets.
Significant surges in demand for rented accommodation, coupled with higher numbers of properties being let and for larger rents, all suggest that house hunters are reacting to the credit crunch by delaying property purchase.
The figures are revealed in the latest Citylets quarterly report, Trends in Scottish Residential Lettings, a respected tool among investors, landlords and letting agencies. It is based on 30,000 annual lettings through 200 agents.
Its latest report for Q1 (Jan-Mar) 2008 showed a substantial increase in people visiting the www.citylets.co.uk website to look for property to rent – up 47% on the same period of 2007. It also shows properties – particularly one bedroom flats in Edinburgh and Glasgow – are continuing to being let more quickly and rents are rising.
The Citylets base index of Scottish rents rose by 3.6% on the same period in 2007 – the highest ever recorded.
Thomas Ashdown, Managing Director, of Citylets said: “With demand remaining extremely strong throughout the last quarter and with more properties being let than we would normally expect at this time of year, we believe that for now more people are choosing to rent rather than buy.
“The well-documented problems in securing mortgages and lower confidence in the property market seem to be the key drivers. However whilst many landlords will take comfort in the latest figures, given the strong demand tenants may do likewise as in general rises over the last year are not significantly out of line with inflation.”
The average rent for Edinburgh rental properties continued its upward trend in Q1 2008 and now sits at £720. Year-on-year, rents for one bed flats grew 5.8% while two bed flats jumped by 6.3% – the largest rises for a number of years.
One bed flats were highly sought after, with a 20% increases in searches for properties being made. Both one and two bed flats were letting more quickly than in Q1 2007.
One and two bed flats in EH3 outperformed the market with respective annual growth of 14% and 15%. One bed flats in EH6 and EH7 let the fastest while the hotspot for two beds flats is EH11.
For the second year running there has been a decline in the number of four and five bed properties being marketed through Citylets. This apparent shortage in available properties has both lead to an increase in rents (up 4% on average) and in the time taken to let. Rents also rose for three bed flats, up 5.1%.
Glasgow, like Edinburgh, enjoyed high activity in its rental sector for one and two beds flats over the first quarter of 2008. Searches for one bed flats were also up 20% and flats were being let much quicker, this saw average rents for one bed flats rising by 4.6% year-on-year.
Two bed flats also recorded a sizeable increase in searches and a decrease in average time-to-let. However, while a high number of two bed flats were let, there was a slight decrease in average rent levels. This is best explained by the fact that there are still pockets of over-supply, particularly new-build, two bed flats in Glasgow.
Overall, average rents are continuing to flatten out and are sitting at £559.
The annual rate of rental growth for one bed flats in Aberdeen has slowed but is still a strong 10.9%. Somewhat surprisingly, after extremely high demand at the end of 2007, average rents eased lower from £561 Q4 2007 to £550 Q1 2008. This is likely to be a correction, rather than a downturn, following the 6.2% surge in rents between Q3 and Q4 2007.
Rental values for two bed flats show a 4.1% increase year-on-year and as with one bed flats the volume of properties let in Q1 2008 was high.
Thomas Ashdown said “Rents in Aberdeen show some declines on the last quarter but it’s too early to tell if the pressure for rental property there is easing.”
www.citylets.co.uk was launched in 1999 and is Scotland’s most successful letting portal. Its quarterly report is the country’s only detailed and independent barometer of the rental market, and is used by investors, as well as potential tenants.
* A copy of the report is attached or is available online at www.citylets.co.uk/reports/