News from Rightmove in May confirms that asking prices across the UK have reached an all-time high, with new sellers pushing the average up to £308,075 – a 0.8% year-on-year increase. Seven out of 11 regions in the UK achieved their highest asking prices ever in May, with prices across the Midlands and Wales growing by more than 4% in the last 12 months.
Combined with these rising prices is a reduction in the number of sales which are being agreed. The Rightmove research shows that the number of sales which are completing is down 5% on 2017, showing that the number of people who are actually able to purchase their own home continues to fall. Areas such as the South East have seen a reduction in the number of sales agreed as large as 8.5% in the last year.
This is not due to lack of interest, with Rightmove reporting a strong interest in listings on the site over the month. It is most likely to be down to the aforementioned rise in asking prices which is creating an unaffordable situation for many.
These people who are being priced out of the market are, in turn, being forced to remain in the rental sector for the long-term.
Recent research from AA Financial supports this assessment, with the numbers showing that as many as 23% of people want to move within the next two years. However, despite demand increasing, there is no real growth in the number of people moving. This suggests that the route out of the private rented sector is not becoming clearer for the majority.
The reality is that a property is only worth what people are willing or able to pay, and if people cannot afford to buy then they must continue to rent. Compounding this is the fact that wages are not increasing at the same rate as inflation for many, meaning that the situation will only worsen for people looking to buy their own home.
What does this mean for buy-to-let investors?
Firstly, investors should not be overly worried by reports of thousands of people looking to leave the rental market. They may wish to, but that doesn’t mean that they will be able to anytime soon. Rental demand is only going to get fiercer over the coming decade.
Secondly, it makes this an excellent time to take stock and reappraise your portfolio. Whether you are looking to sell existing properties to fund future investment or you are about to purchase your first buy-to-let apartment, it is an excellent time to be doing so. The market is vibrant and there is a plethora of impressive investment options available for you.
If you are looking to sell your buy-to-let property, why not get a free valuation today? Or if you are looking to buy, we have many tenanted, income-generating properties available today – browse our property listings for more information.
