£ 3, 100 £ 4, 166 + 4. 6%
MARKET OVERVIEW
SLOWING PACE OF RENTAL GROWTH
Rental growth is slowly starting to ease as affordability constraints grow. However, demand continues to outweigh supply and rents will keep rising in many markets (albeit at a slower rate).
SLOWDOWN
After the last few years of record rental growth, the rate of rental growth is starting to slow. Across the UK’s largest cities, the average rate of rental growth slowed to 8% from 10% a year previously*. In London the slowdown has been even stronger, slowing to 5% from 13% a year earlier. Affordability has been a growing pressure on renters, average affordability across the 60 largest cities in the UK is currently 25.8% and 4 cities alongside London have now seen affordability stray over 30%. In the prime market, average monthly rents continued to grow in November, reaching £4,166, an annual increase of 4.6%. Rents rose in all but one region, with the North East seeing the strongest annual growth.
*Dataloft by PriceHubble. Data was for the 60 largest cities and towns across the UK and based on flats only. Affordability: % of gross earnings spent on each renters share of rent, Dataloft by PriceHubble poll of subscribers, Moneyfacts.
SEASONALITY
Each year, Q3 is the busiest quarter of the year, with students boosting activity and graduates moving into cities to start jobs. With this typical seasonal pattern and the current high levels of demand in the market, it is no surprise that tenant demand continues to outstrip supply. Over two thirds (67%) of estate agents on a recent poll report 11 or more applicants per listing on the rental market*. Investors may be encouraged to see that buy-to-let fixed mortgage rates have fallen month-on-month and are now at their lowest rate since the start of September 2022*. With the new increase in the stamp duty second home surcharge announced in the Autumn budget, we remain watchful on where investor appetite goes from here.
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