This should really be subtitled, Are We There Yet? as in, "have rents reached their peak?"
Well, the Homelet Rental Index for August 2013 for this part of the world would suggest they may well have done. While the index says average rents were £764 pcm in August giving a +2.1% increase from July, the annual variance from August 2012 was flat at +0.3%.
As we've said before the problem with all of these sorts of indices is that not only do they contradict one another but they can mask what is actually happening in a local market. Let's be frank, whose interested in what's happening to rents in Cambridge, Bury St Edmunds, Kings Lyn, Yarmouth unless you happen to own investment property there.
So what are we seeing in the greater Norwich market. The average rent coming from the total of our managed portfolio is £704 pcm up from £690, 6 months ago (+2%) but this hasn't changed much in the last 3. We track the market very carefully and we're seeing a number of agents with available properties that are not only sticking but where reductions are having to be effected to get them let. And, this has been over the peak letting months of the Summer!
Time to sell then? The simple answer is NO. Owning and letting investment property is still a very good business to be in. The depth of the market can only continue to grow until such time as the imbalance between demand and the supply of affordable new housing is properly addressed. Despite Red Ed's promise of 200,000 new homes every year, fairy stories are not real and promises are often broken. However, Landlord Investors should expect fluctuations along the way as they would in the fortunes of any asset class. The great thing about property is that not only can it grow in capital value and provide a good cash yield along the way but it has an intrinsic value, if only because you can see it, touch and, more importantly, live in it!