The number of people enquiring to letting agents to move in the rental market is up by 23% compared to last year, which leaves the total number of people looking to move in either the sales or rental market just 1% below last year’s levels.
There are signs that mortgage rates and availability are beginning to settle following a turbulent two months, with indications they could drop further next year. The data suggests that this is leading to some aspiring buyers looking at the rental market as a short-term alternative while they wait to see where mortgage rates will go.
First-time buyers have been hardest hit by the jump in mortgage rates, especially those who were already stretching themselves financially.
However, this group of future first-time buyers are likely to find competition for a suitable rental home much fiercer than in the sales market, and choice more limited.
The number of smaller available rental homes (studios, one and two bed properties) is down by 4% compared with last year, while in the sales market it is up 13%.
A Rightmove survey found that four in ten (42%) aspiring first-time buyers with plans to get onto the ladder in the next few years already had their total deposit saved, while a further 43% are in the process of saving.
This indicates there is a group of future first-time buyers waiting in the wings to enter the market once they feel like they have more financial certainty. Following the Autumn budget which guaranteed stamp duty savings until 2025, and mortgage rates settling down, there could be the impetus for these ready-to-go first-time buyers to join the market in the new year, especially if mortgage rates do drop.
A survey among letting agents found that on average they are managing 36 enquiries per property and spending nearly six hours managing viewings per property, in what Rightmove has reported as the most competitive rental market on record, with quadruple the number of tenants as rental properties available.
Tim Bannister, Rightmove’s property commentator, said: “It’s completely understandable why some buyers, particularly some first-time buyers, are waiting for some more financial certainty. Now that there are signs that mortgage rates are settling down, the indicators are that they will stabilise at a higher level than previous buyers had been used to. If someone has their deposit saved and is ready to move, they may find that right now presents a better opportunity than a few weeks ago, particularly with more choice coming onto the market and some sellers pricing more competitively in the lead up to Christmas.”
Christian Balshen, Rightmove’s rental spokesperson, added: “It’s extremely frustrating for so many people in the rental market right now, with demand so high. Tenants are trying to secure viewings for properties as soon as they hit Rightmove, and the stock shortage means that agents are dealing with an unmanageable number of enquiries.
“The number of aspiring first-time buyers who have now had to turn to the rental market is exacerbating the situation further. We’re seeing some more properties coming to market, but nowhere enough to meet demand.
“We’re hearing from agents that finding out more information about a tenant earlier is one way they are trying to cope with demand, so we’d recommend to anyone looking right now to give as much info as possible about their position, how quickly they can move, and to get their references ready so they have a better chance of getting the place they want.”