Market Report November 2014
Property Market Report - Bristol - November 2014
In theory we are now approaching the “quiet” time for the rental market. Traditionally letting agents wind down from late November through December as people have Christmas on their mind. However this year the market shows no sign of slowing down due to the fact that there is a lack of available property.
We are in the middle of a property crisis in this city. I am fully aware that this is a sweeping statement but as someone who is at “the sharp end” I feel that this is where we are. Why are we in crisis? The simple answer is a lack of property.
Currently for every 1 or 2 bed mid-range apartment within a mile of the city centre we will have upwards of 50 enquiries. Typically we will have a block viewing of the property for the first 10 respondents; we will also have a waiting list for the next 10 enquiries and we have to tell the rest that there is little chance of seeing the property. The likelihood is that assuming the property is in reasonable order at least 4 of the 10 viewings will want the property and we will then have to make a decision based on a brief meeting and the information supplied on their application.
Why is demand outstripping supply? There are several factors that have come together to create this “perfect storm” These are, the disappearance of accidental landlords, the buoyant sales market, Increasing immigration, and The Bristol effect.
a) Disappearance of accidental landlords
Accidental landlords are people who never had any intention of becoming a landlord, they have become landlords due to circumstances beyond their control be that inheritance or change of personal circumstances. The accidental landlord has been one of the mainstays of the rental market for many years, but with the sales market also going from strength to strength many accidental landlords are seeing the current market as an opportunity to realise their asset and are selling their rental property. The slack is not being taken up by buy to let investors and so the available rental stock contracts.
b)The buoyant sales market in Bristol
As we have seen the buoyant sales market has led to accidental landlords leaving the rental market, but the buoyant sales market also has other negative effects on the rental market. The rise in house prices means that increasingly tenants cannot afford to buy a home, they therefore stay in their rented accommodation which in turn leads to less churn in the market and a subsequent reduction in available stock.
c) Increasing Immigration
Firstly let me say this is not a political point, this is just an observation. Bristol is attracting people from the UK and abroad, thanks to the mix of plentiful highly skilled, highly paid jobs and excellent quality of life. With more people coming to the city, more rental property is needed but as we have seen, the number of available properties is not expanding fast enough to meet demand, creating a demand/supply imbalance. With the rest of the EU still in recession and showing no sign of coming out, and the Universities expanding especially with post-graduate courses, Bristol will continue to grow in the medium term.
d) The Bristol effect
Bristol constantly tops polls as the best place to live in the UK and rightly so. It is the only city outside of London that makes a net contribution to the economy, there are fantastic restaurants, bars, and clubs. The city has a vibrant artistic life with many galleries, museums and performance spaces throughout the city. There are plenty of parks and open spaces with both the Mendip hills and the Cotswolds on our doorstep and the city will be Europe’s green capital in 2015. This all adds up to making Bristol the best city in the UK to live in, which means more people arriving to take advantage of all this city has to offer
So taking into consideration the above, the basic law of supply and demand states that when demand outstrips supply, prices rise, and this is happening right across the city.
Let me give a typical example.
In April we were instructed to let a studio flat in Cotham. The rent was £495 and we recommended a new rent of £535. There were plenty of takers at that rent. In October we were asked to rent the property again, this time the asking rent was £560, we had seven viewings and four people wanting the property.
Our client has seen her rent increase by over 13% in just six months.
Is this sustainable or desirable?
Rents are outstripping pay and so this cannot go on indefinitely.
Bristol is in danger of becoming a “mini London” with people being priced out of the city, and that is not good in the long term.
What’s to be done?
In a previous blog I looked at Mr Milliband’s proposals for a return to 1970’s style rent controls, because as we all know that worked so well. Local pressure group Acorn are also pressing for reform along similar lines, they however are taking more direct action by contacting local agents and organising pickets of letting agencies
What is my solution?
The simple answer is that the imbalance between supply and demand needs addressing and that means more rental property both in the private and social sector, planning applications for affordable rental property need to be given preference over speculative developments, and less “fashionable” areas such as Easton and St George need inward investment in the housing infrastructure
There is one person who can set the agenda for this city and his name is George Ferguson, as city mayor and leading architect he has both the power and the credibility to address the housing problem. He has presided over an unprecedented boom in this city and he has a responsibility to make sure that the whole city benefits.