The private rental market continues to heat up as demand outstrips supply, says North East estate agency group My Property Box.
Such is the pressure on the sector, it recently experienced a bidding war on a refurbished three-bed family home in Darlington, which drove the initial £650 per month rental figure up a further £100 to £750.
Despite that, rent levels in the North East remain the lowest of all the English regions – despite an average 4.7% rise over the 12 months to October
According to the Office for National Statistics the highest rent inflation was recorded in London (6.8%), followed by the West Midlands and Yorkshire and the Humber (5.9%); South East (5.8%); East Midlands (5.7%); South West (5.5%); East of England (5.4%); North West (5.3%). The average rate for England stood at 6%.
Ben Quaintrell, managing director of My Property Box said: “Bidding wars involving rented homes in the North East are largely unheard of, so it does highlight how much demand is exceeding supply – which results in people willing to pay over the odds to secure their desired home.
“I can best describe the market as ‘crazy,’ with properties being let within days of being advertised.”
The high demand is being exacerbated by a sharp fall-off in housebuilding activity – with NHBC’s new homes statistics for Q2 of 2023 recording a drop of 60% for the North East, when just 1,747 new homes were registered compared with 4,386 for the same period in 2022. Yorkshire and Humberside experienced a 37% fall in the registration of new homes, dropping from 5,035 to 3,185.
He added: “Due to the economic uncertainty some developers have opted to put a hold on activity simply because costs are so high.
“Despite this, the North East continues to experience the lowest rate of rental increases of all the English regions, and at the same time, the investor market remains healthy largely due to the shortage of rental properties.
“Many investors are adopting a buy, refurbish, refinance strategy, which allows them to recycle their original deposit through adding additional value by improving the quality of the home.
“Interest rates have steadied of late, with falls forecast mid-way through 2024. This will inject greater economic confidence, which will act as a spur to increased housebuilding activity, and that will be good news for tenants and homebuyers alike.”