Property investment yields ‘show sustained growth’

Property investment yields ‘show sustained growth’

UK rents continue to rise at a quicker pace than the growth seen in other investment assets.

Summary:

  • Average rents in UK have increased by 2.4% over the past 12 months
  • Yields are set to rise further as the private rented sector’s supply and demand imbalance continues to grow
  • Manchester is one of the UK’s fastest growing rental city’s and home of the UK’s highest yields

Rents in the UK continue to rise above inflation, ensuring that property is one of the most popular assets in the current low interest rate environment.

The latest figures from the Office for National Statistics show private rental prices in the UK increased by 2.4% in the 12 months to July 2016. This is the same average rate of increase recorded in the year to June 2016.

More people than ever before are living in the UK’s private rented sector and the undersupply of suitable rented accommodation means that yields are rising for investors who do own assets that are in demand. This undersupply is most marked in England where rents rose 2.6%.

The increasing yields are due to continue, with the supply-demand imbalance likely to remain for the foreseeable future.

According to the Royal Institute of Chartered Surveyors, new landlord instructions were unchanged in the three months July, while the Association of Residential Letting Agents found that over the same period, demand from tenants increased.

Investors seeking the highest yields and the strongest long-term growth prospects should buy properties in regions that exhibit the largest levels of undersupply.

HSBC has revealed that Manchester has the UK’s highest property leads. This is because the city attracts huge numbers of young workers every year due to its high graduate retention rate and burgeoning financial and service economies.

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