Rental affordability is currently at its worst for a decade in seven of 12 UK regions, according to the latest market analysis from Zoopla. Rents continue to register double-digit growth for the 15th month in a row. Seasonal factors contributed to the annual rate of inflation slowing to 10.4% from a recent high of 12% in August 2022.

Zoopla says that an ongoing chronic imbalance between supply and demand has continued to drive up rents across all parts of the UK and is likely to continue into H2 2023 as we approach the usual seasonal upturn in demand over the summer and into the autumn.

With little prospect of increased supply, the growing unaffordability of renting will start to act as a drag on rental inflation. Rental growth is expected to ease towards 8% by the year-end. However, this is still above earnings growth. The impact of higher rents is not uniform with those on low incomes bearing the brunt, with increasing signs of stress.

UK rents have been growing faster than earnings for the last 21 months, since October 2021. This has pushed the proportion of gross earnings spent on rent to its highest level for a decade. Average UK rents account for 28.3% of average pre-tax earnings versus a 10-year average of 27%.