JA NUARY 2024
£2,950
£3,852
+5.6%
M A R K E T O VE R V I E W GROWING BAL ANCE
Demand is easing from peak levels yet remains above the five-year average. Although supply is gradually rebounding, continued competition will support rental growth in 2024. EASING OFF
LOOKING FORWARD
UK rental growth was 9.7% in October (outpacing earnings growth of 7.9%), having slowed slightly from 11.9% the same time in 2022 (Zoopla/Hometrack). Rental demand is currently down 11% from last year’s unprecedented levels, however, it remains 32% above the five-year average (Zoopla/Hometrack). The supply demand imbalance is gradually improving, with demand slowing and available supply up 14% compared with 2022 (Rightmove). Despite signs of easing, competition is still fierce, with the number of enquiries for each property having more than tripled to 25, from eight the same time in 2019 (Rightmove). In a competitive market, renters are having to do more to enhance their chances of obtaining a property, such as being adaptable with schedules and preferences, and being prepared to swiftly undergo referencing.
While rents are forecast to continue to rise steadily, we are past peak growth, with evidence indicating a cooling in tenant demand due to weakening affordability. Although slowing, annual rental growth is forecast to average 3.6% over the next five years*. London will lead the slowdown with rents predicted to rise by just 2% this year (Hometrack/Zoopla). However, regulation and higher mortgage rates will continue to impact new investment in the rental market, maintaining the supply demand imbalance which has fuelled growth. In the prime market, average rents have reached £3,852, up 5.6% year-on-year. Rental growth in the prime markets is above 2% in all regions and is strongest in the South West, with 19% year-on-year growth. *Dataloft, CBRE, Savills, Knight Frank, JLL, Chestertons, Zoopla
£1,200 £1,562 +7% £14
£1,610 £2,056 +9.9% £19
£1,500 £1,822 +4.4% £16
£1,300 £1,629 +3.4% £15
£1,400 £1,696 +2.5% £14
£1,400 £1,638 +6.4% £15
£2,210 £3,061 +19% £25
£2,000 £2,444 +4.7% £20 £2,360 £3,131 +3.5% £23
£4,000 £5,266 +4.9% £47
16% 14% 12% 10% 8% 6% 4% 2% 0% JAN 2023
£1,191 £2,950 £3,852
FEB 2023
MAR 2023
APR 2023
£1,235 £3,030 £3,906
MAY 2023
JUN 2023
JUL 2023
AUG 2023
SEP 2023
OCT 2023
£1,150 £2,750 £3,723
NOV 2023
DEC 2023