Investors are expected to deploy more than £25bn into the single-family housing sector over the next five to 10 years.
Savills’ latest UK SFH Spotlight report found more than £1bn was invested into the market in the first three quarters of 2023.
It said the slowdown in housebuilders’ sales rates has contributed to more firms looking to weave SFH into their business models.
By April, 2023 was already a record year, boosted by several significant deals, including the sale of a 918-home portfolio by Goldman Sachs to PGIM Real Estate.
However, supply remains suppressed with 18.5% fewer properties available to rent in comparison with the 2017-19 average.
According to Savills, a key factor driving lower supply in this market is the decrease in turnover for rental properties. This can be attributed to an increase of buy-to-let landlords leaving the housing market.
SFH developments have traditionally been limited to supply in the North West, but Savills’ report noted a geographical shift to the Midlands and the South It found 95% of investors are targeting locations in the South East, with 85% targeting the Midlands and 80% the South West.
Piers de Winton, head of national residential investment and single-family, said: “The fundamentals for investing in SFH remain strong as demand continues to outstrip supply. The shortage of houses across the country has led to an increased demand for rental properties which has in turn pushed rents.
“There will continue to be strong demand for rental properties given the aspiration of home ownership has become increasingly distant in a higher interest rate environment.
“Tenants’ demand for amenities such as proximity to local schools, green spaces and health services also make SFH a compelling proposition. SFH clearly has a role in alleviating the UK’s supply crisis but will need to scale up considerably if it is to shift the dial.”
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