The average rental price fell in these six cities at the beginning of this year, says Zoopla…
- While rents have risen over the past year, some cities started seeing declines in early 2024
- Overall, rents rose 6.6% this year through April – the lowest level in two and a half years
- But rents still outpace the growth of average incomes
Rents in several cities fell in the first three months of this year, according to new data, which will come as welcome news for renters after years of consistent increases.
According to Zoopla, average rents in Nottingham (1.4 percent) have fallen, followed by Brighton by 1.1 percent and York and Glasgow, both by 0.4 percent.
They are also down 0.3 percent in Cambridge and London as we enter peak rental season between May and September.
Rent increases: While rents have risen in every region over the past year, they have started to fall in cities like Brighton over the past month. Meanwhile, Newcastle has seen a 10% annual increase
While the declines are modest, Zoopla says it provides ‘clear evidence that rental market dynamics are beginning to reverse in these areas’.
Renters have experienced double-digit annual increases in recent years, with rents rising faster than average incomes.
Between April 2022 and April 2023, the average rent for a newly rented home rose by 10 percent, a figure that fell to 6.6 percent in April this year.
This was the lowest rental inflation rate Zoopla has recorded in two and a half years.
According to the real estate website, this was caused by a decline in demand for rental properties.
Over the past year, the typical real estate industry has seen a 25 percent drop in demand for rental properties — even though there are still 15 households chasing each rental property, more than double the pre-pandemic average of six.
Slower growth: Rents rose 6.6% in the year to April 2024, up from 10% in the previous year
Capital gains: Rents in London have risen by 3.7% in the past year – much less than most other regions
At the same time, the average number of homes for rent per agent increased by almost a fifth (18 percent) last year – although it is still lower than before the pandemic.
Despite some local falls in recent months, rental prices are still rising year-on-year in every region of Britain.
The North East saw the biggest increase at 9.5 per cent, but still has some of the cheapest rents in the country, with a monthly average of £704. In Newcastle alone, rents rose by 10 per cent to £805.
Rents have risen in all UK regions over the past year, but generally less than the year before
It was one of only two regions, along with the South West, where average rents rose more in the past year than in 2022-2023.
In Scotland, rents have risen by 9.3 per cent in the past year to an average of £797. This was on top of a huge annual increase of 13.4 percent last year.
At the other end of the scale, Northern Ireland saw the smallest increase at 2.9 per cent, with an average now of £747.
Rents in London rose by 3.7 per cent, although they are still the highest in the country at an average of £2,122. Last year, average rents increased by 13.1 percent.
Richard Donnell, executive director of Zoopla, said: ‘Rent cost growth has fallen to its lowest level in 30 months.
‘Rents continue to grow faster than average incomes, although the difference is much smaller than a year ago.
‘Demand for rentals remains well in excess of available supply, meaning upward pressure on rental prices continues, but there are some areas where rental growth has stalled.’
Donnell added that the next government should encourage the construction of more homes if it wants to reduce costs for renters.
“The number of private rental properties has been static since 2016, which has increased the increase in rental prices over the past three years,” he said. ‘Increased supply is the fastest way to relieve pressure on tenants and improve the overall quality of rental properties.’
How do rents relate to income?
According to Zoopla, rents for new rentals have been rising faster than average income for more than two and a half years.
The gap between rents and earnings growth currently stands at 6 percent, and falling rents are starting to narrow this gap.
However, rental prices are supported by the fact that few new private rental properties are being built, meaning demand still exceeds supply.
The picture varies from country to country and much depends on how affordable rental prices are in relation to local incomes.
However, there is wide variation in how much of people’s average income is spent on rent.
Rents are currently rising fastest in the North East and Scotland, where rental costs make up the lowest share of gross income – meaning there is more room for landlords to increase them.
London, on the other hand, has the highest rents, and these represent a larger share of average income.
These are now back to 2015 levels after falling due to the pandemic.