Thursday, 14 April 2016

Sheffield University Boffins Predict 41,000 Rental Homes In Sunderland By 2032

In stark contrast to the Doom & Gloom being spread by the national media, research recently carried out by Sheffield University predicts significant growth of the private rented sector in the coming decades

By their estimates, the rate of home ownership nationally will fall to 50% by 2032 (today it is 59.8% in Sunderland), while the rate of private sector renting will increase to 35% (it stands at 12.1% in Sunderland today)


Looking at the figures for Sunderland this represents a hugely significant change, however I can understand why this may turn out to be the case

Sunderland property values have remained pretty flat over the last six years, however so have average wages/salaries

What has changed in recent years is that following the Mortgage Market Review it is much harder to get a mortgage, which has served to push home ownership further out of reach for many, at a time when the stock of council houses has fallen significantly

Rather than building more council houses, recent government efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy ISA, and Starter Homes Scheme, an initiative offering a 20% discount for first time buyer

Unfortunately none of this matters if you are unable to save for the deposit...

Currently 14,550 households are living in private rented accommodation in Sunderland however if the above predictions ring true (based on no change in the total number of households but just a shift in the tenure of the existing housing stock) then that figure could rise to over 41,000 households

So whilst it appears Sunderland “Generation Rent” youngsters will continue to rent and to not to buy for the reasons set out above, Sunderland buy-to-let investors can be heartened by the projections of greater rental demand…however they may be faced with increased competition both from new private investors entering the market and possibly also the financial institutions

Faced with the new rules on tax, more and more Landlords will be looking to move away from the previous honeypot of Central London and the Southeast, because its higher prices meant lower rental yields

More and more investors will look further afield into the ‘provinces’, including Sunderland

It is also likely that as predicted elsewhere on the blog, there may be an increase in Build to Let activity with institutional investors wishing to capitalise on this increased demand by building new homes specifically to rent – I remain skeptical about how significant an impact this will have on Sunderland

Faced with the ever changing market and legislation you must take a more considered approach to your existing and future portfolio


The balance of capital growth and yield, especially in this low interest rate world we live in, means Sunderland landlords need to do more homework to ensure the investment in property gives the desired returns both in the short and long term

As always I make myself available for a free, no obligation chat to anyone looking to learn more about the Sunderland property market - whether you are an existing investor with property in Sunderland or are just considering it - give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

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