Lettings agency bemoans ‘crazy’ Glasgow property rental prices
The residential property letting market in Glasgow and its surrounding areas is “going crazy” with rental prices soaring to record levels, according to Riccardo Giovanacci, the managing director of agency Newton Letting.
Mr Giovanacci said that monthly rents were achieving levels that he had never experienced in his 15 years in the sector, and that enquiry levels were off the scale.
He said that his offices were handling enquiries at the rate of around 250 a day, with people chasing only a handful of available properties. Stock levels, he said, had never dipped so low.
“We recently listed a fairly run-of-the-mill property at close of business and by nine o’clock the next morning, we had 300 emails and had taken 30 phone calls about it. I have never seen anything like it,” he added.
“At the heart of the issue is the ongoing shortage of supply. Only the other day, there were just 14 properties available for rental in the entire G12, West End of Glasgow, postcode. In more normal times, there could be 14 properties in a single street.”
Mr Giovanacci’s firm manages around 600 properties on behalf of some 370 landlords and is aiming to increase his portfolio to 1,000 properties in the near future, maintaining an annual growth rate of 10%.
He said the main driver of rental price increases is the paucity of suitable stock, a situation reflected in the estate agency market where lack of supply linked to Covid-driven demand has led to unprecedented sale prices.
Scotland led the way in increases in the value of rental property in the year to March, with a rise of 11% compared to a UK average of 6%. It also topped the table for rental yields at 5.8%, followed by the North West at 5.5%. In the year to July, house prices jumped by 10.5%, according to the Nationwide index.
Mr Giovanacci added: “Prospective home buyers are struggling to find a property and are turning to the rental market, adding to the natural demand from transient renters, up- and downsizers and relocators.
“The market really took off in June with the easing of restrictions allied to the stimulating effect of the better weather. Supply is also being affected by people in rental properties staying put in the knowledge that they would now have to pay significantly more per month for a similar flat elsewhere.”
He said the situation contrasts starkly with the start of the pandemic in March last year when there was a mass exodus as renters left their accommodation to move in with family or friends for the duration of the lockdown. Stock at that time became plentiful.
In August to December of 2020, the market boomed, though not to current levels. It levelled off in January to June this year and then exploded again in the third quarter with an energy which shows no sign of dissipating.
One- and two-bedroom flats in the West End and the city centre are the sector which is Newton Lettings’ bread and butter, and anything within the sub-£1k category is flying off the shelves.
Mr Giovanacci said that in the £1,000 to £2,000 a month range – that is, duplex properties, converted townhouses and four-bedroom red sandstone tenement homes in areas such as Dowanhill Street – properties which might have been expected to take some time to let are going within a week.
He continued: “There are very few areas which are languishing. Demand is across the board, even in less immediately attractive parts of the city.”
And this degree of frenetic activity is also reflected in the sales market, according to Chris Breckenridge, a partner in Corum Property, estate agents.
He said: “There are around 80% more active buyers right now than there was this time last year with significantly less stock available; add to that the race to the bottom that we are seeing from lenders who are cutting mortgage rates across all products and you now have well-funded buyers competing for limited property, so classic supply versus demand economics have pushed house prices by as much as 16 per cent in areas in which we operate.”
Looking ahead, Mr Giovanacci said that the continuing buoyancy of the market will be dependent on whether of not there is another lockdown. The ending of furlough payments at the beginning of this month could also have unforeseen effects.
He said: “For a long time there was no rental growth as buy-to-let entrants distorted the market. In the last eight years, there has been steady growth and now we have this remarkable surge.
“The ideal would be if the market evolved into a period of unexceptional but sustainable growth. That would be of longer-term benefit to landlords and tenants alike.”