The July 2017 rental growth and rental affordability report by Hometrack has revealed that the stock of private rented homes in the UK has grown by 1.1m (31%) since the global financial crisis. However, while demand for rented housing has also grown, the impact on rents varies widely by region.
The Hometrack report examined the long run trends in rental growth and affordability and considered what the near term outlook is for the rental sector. Hometrack’s regional rental indices tracked average asking rents from 2004 onwards across England and Wales.
It found that rents fell between 2008 and 2010. During that period, rents fell by 6-12% as accidental landlord’s boosted supply while the falling levels of employment weakened demand. Since 2010 however, rental growth at a national level, outside London, has largely tracked the growth in average earnings with the growth in rents averaging 2.7% per annum.
Property prices have increased twice as fast as rents in London since 2009
Hometrack reported: ‘London has recorded higher levels of rental growth (compared to the rest of England and Wales) since 2010 averaging 4.5% per annum with periods of weaker inflation in 2013 and now in 2017. Strong employment growth in London over this time, (2-3 times faster than other regions), has increased rental demand. In addition, high house prices and tighter mortgage regulation have made it harder for first time buyers to transition from renting to buying, further sustaining demand for rented housing.’