There is currently a nationwide decline of available properties to rent because a significant number of Landlords are actively selling their rental homes or considering doing so. In fact, research shows that approximately 26% have sold at least some of their properties in the past year, and a further 17% are currently considering reducing their portfolios.
There are several factors contributing to this including changes in legislation, rising costs and taxes, and difficulties in managing properties. This is exacerbating the housing supply crisis and contributing to rising rents therefore making it far harder for the ever-increasing number of tenants to find affordable homes.
There is also a shortage of local authority homes and there are currently 1.3 million households in England on waiting lists. Councils are spending millions of pounds annually on temporary accommodation for homeless households. They are also facing challenges in maintaining their existing stock and building fewer homes due to both rising costs and limited funding.
Over the past 30 years the UK market has seen significant growth with the average house price increasing by 300% from just over £60,000 in 1991 to over £250,000 in 2021 mainly being driven by low interest rates, a growing population and as stated a lack of supply.
The economist and author, Fred Harrison, estimated an 18-year cycle of peaks and troughs with property prices which he says has operated in the UK for at least 300 years. Prices will rise and fall over time in a relatively predictable pattern - and this cycle can be used to the advantage of long-term investment by buying low and selling high and remortgaging near the peak. That being said, there are 2 constant supply and demand factors; property is built on land and there is only a finite amount of it that can be used for property development, more cannot be created which limits supply, and everyone needs a home to live in – whether rented or owned and this drives demand. And this all means that supply struggles to meet demand, causing property prices to increase above wages and inflation.
So, if you want a long-term investment, property remains a viable option