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posted 31st December 2022
The rate at which rental prices are increasing is 12.1% per year, which is higher than the rate of increase in earnings (6%). There is no indication that this trend will slow down, as there is an ongoing mismatch between the supply and demand for rental properties. The demand for rental properties is 46% higher than average, while the supply is 38% lower. Additionally, rental prices in the largest cities in the UK are growing at the fastest rate.
- MARKET FACING A CHRONIC LACK OF BALANCE
The rental market is currently facing a chronic lack of balance between the number of people looking for rental properties and the number of properties available for rent. Factors such as rising mortgage rates are making it harder for first-time buyers to purchase a home, which is increasing the demand for rental properties. Currently, the number of people making inquiries about renting a property at estate agency branches is 46% higher than the average for the past 5 years. Although there has been a small increase in the number of properties available for rent in recent weeks, the overall number of properties available for rent is still 38% lower than the average for the past 5 years and 4% lower than in November 2021.
There is currently no indication that the rate at which rental prices are increasing will slow down in the near future. The high demand for rental properties combined with a limited supply of properties available for rent is causing rental prices to rise quickly.
In the 12 months leading up to October 2022, rental prices increased by 12.1%, which is equivalent to an increase of £117 per month or £1,400 per year. Data suggests that this trend will continue, with rental inflation in the 3 months leading up to October 2022 being the highest it has been since December 2021. It's worth noting that there's a difference between rental inflation for new rentals and all private rentals. 1 in 4 renters moves home every year, so this group of renters will experience rental inflation in line with new rentals.
