Rental demand increases despite lockdown

Rental demand increases despite lockdown

There has been plenty of coverage of the COVID-19 crisis lately, to the point of absolute wall-to-wall coverage 24 hours a day for what feels like months.

The narrative now appears to have shifted to how and when we may see a lifting of these lockdown measures, with the pressure on the economy currently causing alarm bells to ring, despite some causes for optimism.

Within retail and service industries, there is huge concern that these lockdown measures may last much longer than originally envisioned and, as such, could leave real long-lasting damage in its wake.

It’s no wonder that most news outlets are reporting that, whilst the public remain compliant, they’re keen to hear the government’s plans for how a lifting of the restrictions may come about once the initial wave of infections has eased.

The government have been extremely reluctant to discuss those details until they feel confident that the measures have worked and suppressed infection rates enough to justify easing of measures.

With that being said, despite the short term economic shock, it seems obvious that consumer sentiment towards being able to spend on every day things once the lockdown is lifted is extremely high.

For example, whilst the holiday industry is currently reeling from the economic shut down it’s widely expected that consumer appetite for travel once restrictions are lifted will be absolutely enormous.

A similar situation also seems to be emerging in housing and the Private Rented Sector (PRS) as people begin to plan to move as soon as they’re able to.

Zoopla Rental Index

According to the latest figures released by Zoopla the market is set to return with a flurry of activity as renters are able to return to the market and seek to move house.

In the first two weeks of April, up to April 14th, when many industries were looking at serious finance and supply/demand issues, demand for rental property actually rose 30% according to these latest figures.

Rents were even up 2.4% on the year compared to this time last year. This is also thanks in part to a surge in demand whilst supply lay largely flat. Existing landlords and those with an existing portfolio are set to benefit the most.

‘The flexibility of the rental market is one of the key factors which has allowed activity to bounce back more quickly than other parts of the property market,’ said Gráinne Gilmore, head of research, Zoopla. ‘The rise in demand in the first two weeks in April indicates that some tenants are already mapping out their next move.

‘As with the whole housing market however, activity levels and rental growth will likely be closely aligned to the economic landscape of the UK once the lockdown eases and the immediate impact of COVID-19 starts to recede’

The outlook for summer and beyond

It’s quite astonishing to consider that whilst many other industries were counting the cost of the current climate, rental property was seeing a surge in demand at such a disruptive time, indicating the strength of the sector as a whole.

As we edge towards the lifting of certain restrictions and a gradual return to normality there’s a pretty good chance that prices could be temporarily suppressed whilst demand surges, and so this could spell an absolutely ideal time for property investors to seek out superb value investments before the inevitable surge in demand.

It’s hard to say exactly what will happen for the rest of the year, but the current data and trends spell positive news for property investors and landlords.

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