Tenant affordability squeeze drives ‘lowest rental growth since 2019’
Average advertised rents outside of London rose to a new record of £1,280 per calendar month but was smallest rise for five years.
The average rent for new properties coming onto on the market hit another new record outside of London at £1,280 per calendar month (pcm), latest data from the Rightmove Rental Trends Tracker reveals.
But despite a 16th consecutive record in newly advertised rental prices, this quarter’s rise of just £2 (+0.2%) is the smallest since at this time in 2019 before the pandemic.
SIGNIFICANT INCREASE
Advertised rents outside of London are now 9.2% higher than last year, which whilst still a significant annual increase, is the lowest rents have been compared to a year ago since 2021.
In the Capital rents also reached a new record of £2,631 – just £4 (0.2%) higher than the previous quarter – as the yearly increase of rents in London halved from 12% last quarter to 6% now, the the first time rent rises have been in single digits since 2021.
Rightmove reckons the annual pace of rent growth will slow further in 2024 and is predicting rents to be 5% higher outside of London by the end of 2024, and 3% in London.
Tim Bannister, Rightmove’s Director of Property Science, says: “The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that.
“We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of 5% outside of London, and 3% in the capital.”
BETTER BALANCE
Christian Balshen, Rightmove’s lettings expert, adds: “We hope this trend of a better balance between supply and demand continues this year, but the reality is letting agents are still extremely busy compared to what we used to consider ‘normal’.”
Hayley Brinn, Director at The Total Letting Service in Wiltshire, says: “The market is still really busy and the high number of applicants per property is being exacerbated by some landlords leaving the market.
“Prices appear to be levelling out now as more choice becomes available, with tenants becoming more price sensitive, or just reaching the maximum of what they can afford to pay.”
INCREASED DEMAND
Peter Lee, Director at Redbrik Estate Agents in Sheffield, says: “Several factors have contributed to the increased demand for rental properties, including rising mortgage rates, making purchasing less affordable.
“The post-COVID landscape has allowed for greater flexibility in remote working, prompting a notable influx of young professionals relocating from London to more cost-effective cities in the North.
“Consequently, rental prices have grown substantially, and the smaller homes market has experienced the most significant and sustained increase.”
Nathan Emerson, Chief Executive at Propertymark, adds: “It is encouraging to see a firm flow of new rental properties coming onto the market, and Propertymark would like to see that trend continue across the year.
“Propertymark hopes that the UK Government will use the new year as an opportunity to further stimulate growth in the rental market by encouraging a cut in interest rates, reducing mortgage costs and taxes, and provide further incentives to landlords to invest in the private rental market.”
