More rental properties are coming onto the market in the UK and as a result prices are falling, according to the latest rental index from FindaProperty.
The number of available rental properties rose to its highest point since August 2009, triggering a 3.3% decrease in asking prices which fell from an average £890 per month to £861, ending a year of otherwise dramatic rental price inflation.
Prices could fall further in 2012 if stock levels continue to rise, experts said. On a regional level, London remains the most expensive location with rental prices increasing 0.5% in a month to an average asking price of £2,086. It is cheapest to rent in Yorkshire and the Humber, where the average rent is just £558 a month.
Outside London, Wales and the West Midlands are the only regions to show an increase in rental prices in the last quarter of 2011, up 1.8% and 0.9% respectively on the quarter, with all other areas showing rent falls compared to the third quarter of 2011. The corresponding rental asking prices for these regions were £639 and £674 per month.
The North West and South East recorded the most dramatic fall in rent asking prices, dropping 7.5% and 7.1% respectively. The corresponding rental asking prices for these regions were £593 and £1,080 per month.
‘Up until the fourth quarter of 2011 both rental stock and asking prices were steadily increasing. Now, not only has the average rent fallen to £861, but rental stocks are at their highest since August 2009. This should give more power to renters, which will ultimately result in more freedom, greater choice and a better deal,’ said Samantha Baden, property analyst at FindaProperty.
The index also shows that while asking prices decreased by 0.4% , £902, last month to £217,483, they are still 1.1%, £2,294, higher than a year ago.
The North West and Wales were the only regions to experience price inflation last month, with asking prices rising 0.1% . This brought the average price of a North West home to £163,603 and a Welsh home to £169,660. In Scotland asking prices fell 1% from £149,596 to £148,121.
Asking prices for first time buyer properties fell by 0.2% in December and are now £152,633, the seventh consecutive monthly decline. Affordability for first time buyers also improved slightly as a result of a lower income multiple offered by mortgage lenders and the average first time buyer in December had to find a deposit of £49,135 on average, some £357 less than in November.
Asking prices for houses fell by 0.5% to £238,546, a decrease of £1,232 while prices for flats decreased slightly slower, by 0.1% or £219, to £174,043. On an annual basis, prices for houses are 1% higher than December 2010, while flats are 1.3% higher.
For the second month in a row, asking prices for larger family homes fell faster than any other property type, with five plus bedroom houses dropping by 0.9% or £4,684 to £536,273.
The average asking price for one and three flats fell by 0.2% and 0.4% respectively, with a one bed flat now costing £127,186 and a three bed costing £312,530. However, the average asking price for studio flats grew by 0.4% to £154,853. Two bedroom flats saw no change in price in December and still cost £176,062.