As homebuyers struggle, a boom in the rental market may be on the horizon.

The rental market in the country is expected to boom as the real estate market continues to falter. However, historical trends in the housing industry show that declining sales of real estate are also boosting private rental market shares. This City AM spoke with a leading city fund manager. weekend.

According to Ian Crawford, CEO, Alliance Fund, this trend was confirmed by downturns in the rental and sales markets during the Great Recession 2008/2009 financial crisis, and the recent downturn due to the Covid pandemic.

The Alliance Fund, a city-based fund, found that property sales in England fell by 49.3% year-on-year during the Great Recession.

Then, it continued to fall another 3.1% the next year before rebounding to 6.4% in 2010.

In England, the private rented equity was up 8.2 percent in 2008. This is an increase of 261,474 homes that were rented in one calendar year.

This was followed by a 7.6 percent annual increase in 2009, with 261,264 privately rented houses. This increased the number of Palestinian refugees from Syria up to a record 3.705million homes.

“When the initial uncertainty hit the market due to the Covid-19 pandemic, the level of homes sold in the property market in England was also affected, falling by 15.9 per cent in 2020, by far the largest annual rate of decline seen since the Great Recession,” he stressed. Crawford.

He said, “In contrast to that, the growth rate for the private rental sector have seen a steady decline from 2009, and its volume was already declining until 2020.”

However, after the Covid market downturn, the market’s private shares rose by 1.1 percent in a single year. This is the first increase since 2016.

After two decades

The market has grown at an average rate 4.7 percent annually over the past 20 years when the market has not been impacted by the economic downturn. However, the sales volume of the private rental market has grown at an average rate 4.1 percent per year.

However, sales volume fell by an average of 22.8 percent during periods of economic instability while rental market growth was averaged at 5.6 percent.

Crawford stated that the jury is still out about the current turmoil in real estate and the impact it will have on homebuyers’ ability of financing mortgages, as well as on home prices, if any.

Historical market trends suggest that if housing takes a beating, the nation could see a boom on the rental market. Many of us still depend on the private sector for shelter.

Crawford pointed out that the decline in buyer demand is a concern for those who are bringing new housing stock onto the market. This is because they won’t have the same opportunity in a buoyant market.

He is a strong believer that if an opportunity does not present itself, it’s time to build one. So in times of difficult housing market, we simply keep a larger portion of our portfolio and use it in the rental market.

“This ensures that we are not adversely affected by perceived deterioration in market health and allows us to maintain a strong and consistent cash flow, avoiding a huge capital gains tax bill, as well as giving us access to funds to pay back shareholders,” concluded Crawford.