The Buy-to-Let Exodus
Rental Properties Flood the Property Market Amidst Economic Uncertainty
A dramatic surge in buy-to-let properties entering the sales market has been witnessed over the past twelve months, according to newly released comprehensive market analysis.
Fresh statistical evidence from property intelligence firm TwentyEA has unveiled a remarkable trend: a staggering 11.3 per cent of all newly listed properties for sale in the third quarter of 2024 had previously served as rental accommodations within the preceding three-year period.
This marked increase represents more than a twofold rise from the 6.8 per cent documented in the corresponding quarter of 2023, whilst also showing a considerable uplift from the pre-pandemic figure of 8.9 per cent recorded in the third quarter of 2019.
Capital Leads Unprecedented Shift
The most pronounced manifestation of this phenomenon has emerged in Britain’s capital, where London has experienced an extraordinary transformation in its property landscape. A remarkable 47.2 per cent of all newly listed properties for sale in the third quarter of 2024 had previously been utilised as rental properties—a dramatic escalation from 27.1 per cent in the corresponding period the previous year.
Whilst this significant trend has demonstrated particular intensity within Inner London’s prestigious postcodes, fresh analytical data indicates that every region throughout the United Kingdom has experienced an uptick in formerly rented properties entering the sales market between July and September 2024, when compared with the same period in 2023.
Regional Variations Paint Compelling Picture
In the East Midlands, the proportion of previously rented homes entering the sales market experienced a substantial increase, climbing from 5.2 per cent in the third quarter of 2023 to 8.4 per cent in the corresponding period of 2024. Similarly, Wales witnessed a noteworthy rise, with figures ascending from 4.0 per cent to 6.1 per cent over the same timeframe.
Property Supply Reaches Six-Year Peak
Within the residential sales sector, the average asking price for properties across the United Kingdom during the third quarter of 2024 stood at £436,000, representing a modest increase of £1,800 (0.4 per cent) from the third quarter of 2023. However, it is worth noting a significant reduction of £20,000 from the second quarter figures. Industry experts emphasise that this decline primarily reflects the diverse mixture of property stock being listed as new instructions, rather than indicating actual achieved sale prices.
Concurrent with these price movements, the supply of properties available for sale in the third quarter of 2024 has reached an unprecedented level, surpassing any point witnessed in the previous six years. The current figure of 456,902 available properties represents a substantial 9 per cent increase from the 419,807 recorded in the third quarter of 2023. Moreover, property exchanges have demonstrated robust growth, showing a 10.9 per cent improvement compared to the same period in 2023, suggesting a continued market recovery.
Anticipation Builds for Labour’s First Budget
Katy Billany, Executive Director at TwentyEA, provided expert insight into the current market dynamics: “The observable increase in sales activity can be attributed to the more favourable mortgage rates, which have catalysed heightened interest amongst prospective homebuyers. The Bank of England’s recent decision to maintain the base rate has introduced a welcome element of stability to the market. Furthermore, it is particularly noteworthy that market demand has remained resilient despite the political transition following July’s parliamentary election.”
“Nevertheless,” she cautioned, “we must acknowledge that for certain homeowners, the financial pressures associated with fixed-rate mortgages may be compelling them to sell their properties due to affordability concerns.”
Ms Billany further elaborated that many potential buyers are adopting a wait-and-see approach pending the forthcoming budget announcement.
“As has consistently been the case, market confidence and general sentiment serve as fundamental pillars of property market performance,” she explained. “While we have observed a significant uptick in sales compared to the previous year, a considerable number of prospective buyers are exercising patience until after Labour’s inaugural Budget, which is now merely weeks away. The specific implications for property owners will ultimately determine whether the market maintains its current trajectory of acceleration.”
Industry observers and market participants alike await these upcoming developments with keen interest, as they may significantly influence the direction of the property market for the remainder of 2024 and beyond.