City rental rates stay buoyant as its house prices fall
Private rental rates in Belfast have remained strong over the last year despite the difficult economic environment, according to research from a lettings website.
The report from Citylets said that the average monthly rent paid to a private landlord in Belfast across all property types was £572 at the end of June, little changed on £571 a year earlier.
Demand for two-bedroom flats and apartments rose with the average price paid up 4.1% on the year to around £565 a month, while two-bedroom houses fell by the same percentage to £446 .
Rental market analyst Dan Cookson said that with no real sign of an end to Northern Ireland's continuing house price decline, many prospective first time buyers are renting for longer.
But since January 2008 the rental market has risen 2.1% compared to a 44% drop in the price of property, meaning a sharp rise in yields from landlords.
"Generally, landlords in and around the city are experiencing reasonably good levels of tenant demand and this is supporting rent prices overall," he said.
"Despite the economic woes, rent prices have remained stable, which we believe has been supported by the ongoing lack of mortgage finance for first-time buyers and the big deposits being called for, as well as improvements in the quality of property on offer."
He added that with rent prices holding steady against falling property values, the return on investment - or the annual yield -continues to rise.
In Northern Ireland, landlords enjoyed yield rates on new acquisitions of approximately 5.2% in May 2012 compared with 3% in Jan 2008*.
Nicolas Brennan of estate agent chain Morton Pinpoint, added that while activity in the buy-to-let market is significantly down from peak levels, investors have become increasingly confident.
"With investment yields moving steadily higher as house prices drop, many landlords with a long-term view, and with finance behind them, could be assured that the many would-be buyers still frozen out by the mortgage market will continue to provide demand for any additional properties they choose to invest in," he said.
"In some areas of north Belfast, rental yields are already approaching 10%."