PROPERTY
PROPERTY PERPLEXITY Uncertainty in political events creates an unpredictable landscape
it’s come early, the autumn market (one of the big sales pushes) won’t be impacted. We can expect more clarity more quickly.” ‘Exceptionally busy’ lettings But while sales remain slow, the lettings market is red hot. “Lettings is exceptionally busy,” surmises Alex. “Quite often, that goes hand in hand; if you have a busy market on the rentals side, there can be a downturn on sales.” As per Savills’ February report, 31% of households in Cambridge are renting – almost double the England average of 19%. This is partly due to the city’s employment market – notably, its growing science and technology sectors – which has increased Cambridge’s population by 17.6% between 2011 and 2021. This, again, is well above the England average of 6.6%. Bidwells’ Q1 rental report notes that 63% of renters work in science, tech and innovation. One- and two-bedroom flats are most in demand, experiencing the biggest annual spike (10.1%) in prices. “It is highly competitive right now,” highlights Alex. “There’s not enough rental stock. The demand is outweighing the supply.” The average rent was £1,642 in April – a 7.6% increase over the same time last year, according to the ONS. Alex reckons it is common for tenants to bid above the asking price – something set to continue. “The demand levels will not change.” “We’ve got multiple applicants for every property,” adds Rob. “I’ve never seen so many landlords increase their rents as much as they have in the last 18 months.” Most renters, he stresses, are younger than in the surrounding areas. “People cannot afford to buy, so they have to rent; it’s very difficult for young people in Cambridge.” Rob believes the situation could be exacerbated by the outcome of the election. “Supply and demand are out of
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kilter, and I don’t see that reversing any time soon. Successive governments making bad choices have led to this, and it will take years – possibly decades – to reverse. Landlords don’t want to be there any more, and they’re not buying as much as before.” While capital growth for investors remains high, Rob is concerned that potential changes to capital gains tax and rental reform, for example, could discourage investment buyers and damage the private rental sector. “They want to make the rental market safer and better- quality for tenants, and I agree. But the best I think we are going to see more activity and confidence
way to drive up standards is competition: supply and demand.” Rob welcomes potential leasehold reforms, which will allow lease extensions of up to 990 years and make improvements to transparency over service charges. This, he supposes, will help to encourage the sales of leasehold flats. “That will bring benefits for everyone.” Looking forwards There are also other sources of optimism. Cambridge’s development and enduring popularity as a place to live will continue to fuel house price growth. The Grafton Centre – which earlier this year secured planning permission from Cambridge City Council to be converted into a laboratory and office space for life science and tech companies – will draw more people to the area. Housebuilding and a new build-to- rent development in Eddington may help to ease the supply shortage, declares Alex. Agents are hopeful the Bank of England will cut interest rates, forecasted for August or September. “That’s going to fire the market up,” points out Andrew. “There’s a pent-up supply and demand that is waiting for an interest rate reduction.” “Q3 is going to be a better time. I think we are going to see more activity and confidence,” reports Alex. “Once the election is over, people will at least have some certainty, in whatever direction that might be.” Until then, the market must weather some uncertainty. “We have no idea where we’re going,” concludes Andrew. “I threw my crystal ball out in 1988 when we had a crash.” Rob agrees: “It’s going to be an interesting 12 months.”
BIDDING WARS The high cost of renting in Cambridge is causing difficulties for young renters, who are feeling the pinch as they compete with stiff competition and steep prices
CAMBSEDITION.CO.UK JULY 2024 79
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