Flat rentals outperforming house and townhouse rentals

Flat rentals outperforming house and townhouse rentals

29-08-2011

Despite still showing mediocre growth — below consumer inflation — flat rentals are at least outperforming house and townhouse rentals.

On a national basis, in the second quarter of 2011 flat rentals were up by a yearly rate of about 3%. Rentals for houses could only muster growth of roughly 1%, while, in contrast, rentals for townhouses showed no growth. Given consumer inflation (excluding housing) of 4% over the same period, these dismal figures imply contracting real rentals across all three residential property types. This is certainly not good news for buy-to-let investors. But, for those interested in consumer inflation, the very low growth at present has an almost negligible effect on the overall metric of consumer prices. This is due to the heavy weight (16,4%) of residential rentals in the calculation of headline CPI.

Some good news for investors in the buy-to-let flat market is that, after peaking at the end of 2009, flat vacancies have since been drifting downwards. This improvement in demand naturally bodes well for market rentals.