Wednesday, 8 October 2014

140% Increase in Private Rented Homes in Sunderland Since 2001

It seems a distant memory that back in 2011 we were all filling in our Census returns, but now the final figures for each individual area have been released. It all makes for some very interesting reading especially around the property sections, so let’s look at the Sunderland figures.

Currently, of the 119,758 properties in Sunderland, 60% are owned and 38% rented (that leaves 2% of 'other', maths fans). Comparison with 2001 reveals that the headline percentages are pretty much exactly the same then as now, so unlike other areas there is no massive swing from home ownership to renting in Sunderland (although it is worth noting that there has been a 5% reduction in Mortgaged Home Ownership during the decade).

Things get far more interesting for Buy to Let investors when you look at the change in the composition of the rented sector. 

Back in 2001 86% of the 45,318 rented homes were classed as Social Rented, with only 12% in the Private Rented Sector. Fast-forward to 2011 and the Private Rented Sector now makes up 28% of all rented accommodation in Sunderland with 13,077 privately rented properties compared to 5,453 in 2001  - a significant increase of 140% more homes in that period.

It's likely that this is simply the market plugging the gap left by the transfer from Sunderland Housing Group to Gentoo which has coincided with a reduction in the Social Housing stock by over 6,600 properties.

It's not as if massive amount of new homes were built in Sunderland during the period (there are only 3,402 more homes in 2011 than in 2011 a pretty poor average of 340 new homes per year), so this fits with our expectations that the rise in the Private Rented Sector has been through a change in the tenure of the existing housing stock rather than a "New Build Buy to Let Bubble", as other towns and cities have experienced during the period.

So what does this all mean...? I would suggest that the fact that there has not been such a 'Bubble' combined with an ongoing shortage of good quality family accommodation in the Private Rented Sector puts Sunderland in a stronger position than most for attracting investors over the next decade.

Most commentators predict the demand for rental property will steadily continue to rise, as the UK turns into a more European model of home ownership meaning there should be strong tenant demand in Sunderland and when this is combined with a relative shortage of accommodation to meet this demand it should suggest a continuation of strong yields and the potential for capital growth.

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