RENTAL DEMAND SKYROCKETS: ANALYSTS CAUGHT OFF-GUARD
A new report released by the Social Housing Foundation shows that rental demand has sky rocketed to the point where rental demand is beginning to outstrip supply, especially in inner city areas. Vacancy rates are now at an all time low.
The report reveals that in spite of slowing house price growth, rental prices continue to increase.” The reduction in the available supply of rental accommodation is being driven by population growth, and the increasing preference for rental accommodation over outright ownership; as interest rates and economic conditions have worsened.
However availability isn’t the only issue, even though accommodation may be available prices have beendriven to levels beyond the means of many previously able to afford accommodation.
Price increases are not only driven by supply and demand, but also by urban renewal projects which increase an areas status value. This results in higher property prices – which in turn forces poorer tenants out of the area. One of the major implications of the new report is that government policy and private sector interests have been caught off-guard by the shortage.
The construction sector has little incentive to meet the current need for housing in the current economic climate as consumers with sufficient means to purchase property are in shorter supply than before.