Zoopla's latest figures are in, and they paint a pretty dramatic picture of the UK rental market.
Despite a slight softening in rental demand, there are still a whopping 15 people vying for every rental home. That's more than double the pre-pandemic average of six!
While the supply of available rentals has grown by nearly 20% over the past year, it's still a third less than what we had before the pandemic. The lack of new investment in rental properties is a big part of the problem.
Interestingly, rents have dipped in several regional cities due to localised supply and demand shifts and affordability constraints. Nottingham, Brighton, York, Glasgow, Cambridge, and even London have seen modest rent decreases in the last quarter. However, these drops are minor compared to the rapid rent hikes we've seen recently.
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In London, there's a noticeable inner/outer split. Inner areas like Westminster and Tower Hamlets have seen rental growth slow significantly, with rents rising by less than 2.5% over the past year. Outer areas, such as Barking & Dagenham, Redbridge, and Havering, have experienced yearly rent increases of over 10%. The average rent in London is now a hefty £2,122, compared to the UK average of £1,226.
Despite the narrowing gap between rent growth and average earnings, there's still a significant variation in how much of those earnings go towards rent. Londoners spend 41% of their gross earnings on rent, while Scots spend just 21%. This explains why rents are rising fastest in the North East and Scotland, where rental costs are a smaller chunk of earnings.
The stagnant supply of rental homes since 2016, exacerbated by tax changes and rising interest rates, has only added to the pressure. Zoopla's data shows a steady flow of previously rented homes hitting the sales market, averaging around 31,000 per quarter over the last four years.
Richard Donnell, Zoopla's executive director, sums it up: "Growing the supply of rented homes, both private and affordable, should be among the top housing priorities for the next Government. More supply is the fastest route to easing the pressure on renters and improving the overall quality of rented homes."
So, there you have it. The rental market is in a bit of a pickle, and it looks like supply is the key to turning things around.
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