Rents drop further but yields remain unchanged

Posted under General by Alan

The latest rental index indicates market is flooded with excess stock. Number of advertisements of rental properties on websites has increased 43% in last 6 months with rise of 8% in January alone.

Rental prices have fallen by 4.8% over last year and 1.2% over January 2009.

The annual fall was steepest in North West, at 14.3% and it accelerated during February as prices plummeted 8.2% over January 2009.

In the City of London annual fall is reported to be 11.7% although average rents are 50% more in London boroughs.

According to a research report, average rental asking price in the UK has now touched level of £830 per month, which is £10 lower compared to January and less by £42 than 2007.

However gross yields in February remained at 4.6% for the 4th consecutive month.

Excess stock in the market is due to entry of new vendors who are unable to sell in the current downturn and financial conditions. There is increase in turnover to some extent as tenants are moving to properties available at more affordable rents.

However investors are not expected to abandon market as gross yield has attained stability and is likely to improve in future with continuous fall in house prices.

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