Latest rental values news: growth continues, affordability strains, expanding search. Intense competition, above-listing prices. Nicky Stevenson, the managing director of Fine & Country, reveals that rental values are continuing to experience annual growth during the typically busy summer season, and there are no clear signs of an impending slowdown. As a consequence, affordability remains strained, compelling renters to expand their search areas.
Stevenson highlights that in the prime market, average rents have increased by 11 percent compared to the previous year. However, the North East and South East regions are the only areas where the average cost of a prime monthly rental has decreased year-on-year.
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Stevenson further comments on the findings from Rightmove, indicating that the demand for rental properties has surged to 162 percent higher than the levels seen in May 2019. This heightened demand has resulted in intense competition among renters, with over a quarter of properties being let at prices exceeding their initial listings.
According to Zoopla, the persistent rise in rents surpassing average earnings over the past 21 months has resulted in a constrained affordability situation. The ONS Opinions and Lifestyle Survey reveals that 15 percent of renters now find it very challenging to meet their rent payments, a significant increase from 10 percent in November of the previous year.
Consequently, renters are compelled to alter their search strategies, as reported by Rightmove, which indicates a 50 square kilometer expansion in rental search areas.
Stevenson acknowledges the enduring supply-demand disparity, stating, “While it is unlikely that the supply of rental properties will witness a substantial improvement in the near future, a slowdown in the housing sales market might offer some relief.” A reduction in the number of properties sold by landlords and an increase in homeowners renting out their homes while waiting for any potential price declines could slightly enhance the rental inventory. Although there has been a consistent departure of landlords from the sector, as reported by Zoopla since 2018, the pace of this trend is not accelerating.
Stevenson concludes by highlighting the resilience of the rental sector as a viable investment option in the medium to long term. Over 25 percent of landlords owning five or more properties are intending to expand their portfolios within the coming year. According to the Royal Institution of Chartered Surveyors, rental growth is projected to reach a steady annual rate of 6 percent over the next five years.
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