Property Market Report: Rents Rapidly Growing in Most Regions

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Rental Growth Remains Comparable to 2023 in Most Regions

According to Zoopla’s latest Property Market Report, the average rent for a new let in the UK in January 2024 was £1223. This represents a 7.8% annual rise. This is the slowest rate of growth in two years, suggesting growing stability in a market that was characterised by record-breaking double-digit percentage rises in 2023.

Last year, this growth stood at 11%, but most property commentators agreed it would not likely continue indefinitely, as it would quickly hit an affordability ceiling for the average tenant.

The annual growth percentage for January this year does represent a slowdown, but the figure remains high. This suggests that while rental growth is past the record-breaking peaks of 2023, rental prices are continuing to increase at a fast pace. In fact, most regions are still experiencing year-on-year rental inflation that is broadly in line with 2023.

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London Records Biggest Rental Growth Slowdown

Of all UK regions, London has demonstrated the sharpest slowdown in annual rental growth.

Compared to last year’s +15.3% annual growth, London rent has risen at a rate of +5.1%.

London’s quick drop in growth has significantly contributed to the slowing of average rental growth in the UK, as growth is similar across most of the country to last year. The average rental growth for the UK is 9%, excluding London, compared to the overall average of 7.8%.

As expected, Scotland has the largest rental increase, registering 11.6% positive growth. Scotland’s rental inflation for new lets has been extremely high since a rental cap was introduced to existing tenancies.

Scotland’s rent cap makes it an exception, but very high growth similar to last year has also been seen in the North East (9.9%) and the North West (9.8%).

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Half of Rented Homes Are Now in £1000+ Per Month Market

Zoopla states that monthly rents are now 29% higher on average than before the pandemic in January 2020. After this swift climb in rental costs, 51% of rental housing in the UK is located in markets with average rents of over £1000 per month. This amount has almost doubled in five years.

The rise in £1000+ per month markets has also hit regions that are historically more affordable. Three years ago, no areas outside of the South of England had an average monthly rent of over £1000. But now, a fifth of rental properties in Scotland, the North West, East Midlands and West Midlands are in these pricey markets.

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Are Rents Going to Go Down in 2024?

The average letting agent is currently listing 12 available rental properties. This is a fifth higher than last year but also 28% below the pre-pandemic level of 16.

Demand for rental properties has decreased by a fifth over the last year, but there are still more than 15 enquiries per available home. This is twice the amount recorded pre-pandemic.

According to Zoopla, there is unlikely to be a huge expansion in supply this year. With no major boost to supply and a continuing supply-demand imbalance, UK rent is predicted to continue rising, albeit slower than last year.

This is backed up by rental forecasts from other expert sources such as Savills. They predict that rental values will grow by 6% in 2024.

To learn more about the UK property market, take a look at some of our latest buy-to-let guides covering topics like investment property available in Rotherham and buy-to-let property in Darlington.

Property Market Report: Rents Rapidly Growing in Most Regions