Over the past 3 years, the property market’s ‘supply crisis’ has seen price growth in the rental sector climb by 2.61% year-on-year. This comes as tenant demand is up by around 6%, while the number of rental properties available is 50% lower than a year ago.
And so far in 2022, activity hasn’t appeared to cool-off, as average rents have grown in price for the fifth consecutive month by 2.8%, with the average cost of a rental property in England currently totalling between £1,020 and £1,050 per month.
The highest rent increases are seen in the South West, where a sizeable 10% increase was recorded. The North East follows closely behind, despite offering some of the cheapest rentals in the country, where costs rose by 8% over the last month. The West Midlands is the only region showing evidence of a decrease, where a 2% price reduction was recorded.
June marked the fifth consecutive month of average rent prices on the rise in England, on the heels of a slight cool-down in costs over the winter months. However, June’s average prices still remain below the historical highs recorded in September 2021, when prices reached as much as £1,104 per property.
Low vacancies and high demand
In the midst of ongoing market demand, voids substantially dropped by 10% during June. The average period for rental properties in England being vacant is now down to 17 days. Many tenants will be reluctant to move on while supply is so low and the market remains highly competitive, as well as rent prices rising month-on-month.
Growth in tenant enquiries
Rising rents are largely driven by a shortage of available rental stock, with low volumes struggling to meet the high rate of demand rising over the past three years. Throughout this year, the rental market has seen continuous growth in tenant enquiries due to a combination of factors, including the post-pandemic search for space.
Tenant salaries remain stable
Tenant salaries are seeing a month-on-month increase with a very slight rise of less than 1%. The average take-home annual pay for a tenant in the UK is now at £29,275, which is 14% higher compared to previous year-on-year averages. Many companies are responding to the current ‘cost of living crisis’ by offering better pay.
Hope on the horizon
Despite the clear shortage in the supply of available homes to rent, signs of improvement are gradually beginning to emerge. The number of new rental listings has increased by 8% since the start of 2022. June saw the highest number of new rental listings come to the market out of any month this year so far. It will take time for a natural balance of supply and demand to play out, but as we approach winter with rising interest rates, the cost-of-living crisis growing and the looming 2025 EPC deadline approaching for landlords, fierce competition in the market is expected to reach a cool-down and therefore return balance and supply back to a better harmony.
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