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Rental Supply is Falling While Demand and Prices Are Rising

Rising rental demand continues to pile the pressure on declining supply, while city house price growth has hit a two-year high, according to Hometrack. 

The company’s Q4 2019 report stated that UK rental growth was up +2.6% annually to £886pm in Q4 2019 – the fastest growth rate in three years. There has also been a 4% contraction in the supply of homes available to rent over the last two years, while the demand for rented homes increased by 8% in 2019 alone.

Rental growth continues to run below the annual growth in average earnings (+3.8% according to the ONS), and rents in London are rising at 2.8% per year, the highest level for almost four years, as the available supply of homes for rent in the capital has declined by 19% since 2017.

Three cities are currently registering rental growth over 5% per annum – York (+5.0%), Bristol (+5.5%) and Nottingham (+5.8%). Meanwhile, rents are falling in three cities - Aberdeen (-2.8%), Middlesbrough (-1.1%) and Coventry (-0.1%).

Richard Donnell, director of research and insight at Hometrack, said of the report: “It’s the second in our new quarterly series that accurately tracks the changes in achieved rents over time. The report reveals that rental growth hit a three-year high on a lack of rental supply but the increase in rents is still below the growth in average earnings. 

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