Rental Market Update 2024: Easing Inflation and Changing Dynamics:

Recent trends in the UK's rental market show a noticeable shift as rental inflation cools off, marking the slowest rate of increase in nearly three years. Here’s what’s happening across the nation:

Current Rental Trends:

• In cities like London, Brighton, Glasgow, Nottingham, and Worthing, rental prices are beginning to dip.

• A significant third of London boroughs have recorded decreases in rental rates.

• Nationwide, the expected rental price increase for 2024 is projected at just 3-4%, a sharp decline from 11% in 2022 and 8% in 2023.

Shifting Dynamics in Rental Demand:

• The fervent rise in rental costs over the past three years is tapering, with current increases being the most modest since 2021.

• Although the demand for rental homes has decreased by 39% from last year’s high, the market remains active with 17 prospective tenants for every available rental, still significantly above the pre-pandemic average.

• The supply of rental properties has slightly improved, up by 17% over the past year, thanks to increased purchases by corporate landlords and a slight easing in mortgage rates helping renters transition to homeownership.

City-Specific Insights:

• In the first half of 2024, rents decreased in cities like Nottingham, London, Worthing, Brighton, and Glasgow.

• Conversely, cities like Bradford and Liverpool are witnessing faster rental increases due to more room for growth.

• The fastest rental growth is now seen in accessible suburbs and larger cities where the cost of renting still offers relative value, with places like Rochdale, Doncaster, Sunderland, Southend, and Telford experiencing over 4% rental inflation in the first half of 2024.

London's Rental Market:

• London remains the most expensive region for renters, with average monthly rents standing at £2,172, nearly 70% higher than the UK average.

• Rental affordability is becoming a significant barrier, particularly in inner East London areas such as Tower Hamlets, Newham, and Greenwich where rents are falling.

• Despite a general slowdown, some outer London areas like Merton and Havering are seeing higher growth due to relatively lower rents.

Overall Market Outlook:

• The rental market is adjusting to higher borrowing costs and a normalisation of demand post-pandemic.

• The outlook for 2024 suggests a continuation of this cooling trend, with rents expected to rise modestly by 3-4%.

• The rental sector remains a dynamic component of the UK housing market, influenced by shifts in economic conditions, changes in consumer behaviour, and the balance of supply and demand.

Written by Veera Josey, 21st August 2024

Source: Zoopla, BBC News