Over the last 10 years inflation (CPI), which measures the average cost of goods and services (or the cost of living), has outpaced residential rents, according to the latest (October 2018) Hamptons International Monthly Lettings Index.
As a result, real rental growth (rental growth adjusted for inflation), has fallen by 2.2% in Great Britain since October 2008, according to the Index, because while rents have risen 22%, inflation has risen by 24% over the same period.
The East and London are the only regions across Great Britain where rental growth has outpaced inflation. In the East, real rents have risen 7.5% over the last 10 years. Meanwhile in London, real rents are up 0.5% since October 2008.
However, inflation has outpaced rental growth in all other regions across Great Britain, resulting in negative real rental growth. The Midlands has seen the biggest fall in real rents, down 7.8% since October 2008. Whereas real rents in the North have fallen -6.9% as inflation has outpaced rental growth.
Commenting Aneisha Beveridge, head of research at Hamptons International, said: “Real rents in Great Britain have been falling for the last 21 consecutive months. This comes as a result of sluggish rental growth and a post-EU referendum backdrop of rising inflation. However, this could be set to change as inflation begins to fade and rental growth starts to pick up pace.”