2 May 2023 – The private rental sector has seen rents rising for the thirteenth quarter in a row. At £1,190 per calendar month, the national average rent outside of London has reached another new record high.
The property portal Rightmove has released its Rental Trends Tracker for the first quarter of 2023. And while the figures have shown that rents have risen again between January and March this year to a new record high, the pace at which rents are rising is slowing down.
The national average rent outside of London is now £1,190 per calendar month. Greater London has also reached a new record high, with the average rent exceeding £2,500 for the first time.
The quarterly change in Greater London was 0.9%, compared to 5.8% in the last quarter. Rents in Inner London have risen by 0.4% and in Outer London by 1.5% compared to the last quarter.
Inner London is still the most expensive place to rent, with an average rent asking price of £3,021 per calendar month. The biggest average rent outside of London has to be paid in the South East of England, where the average rent is £1.676 per calendar month.
The cheapest region to rent is the North East, where the average rent comes to £803 per calendar month.
National Average Rent Rises Slow Down
All regions in the UK have seen rents rise again in the first quarter of 2023. The biggest quarterly change has been reported in Wales, where prices have risen by 2.3%. Followed by Scotland, the East Midlands and The East of England, where rents have increased by 2% compared to the previous quarter.
The smallest quarterly increase in average asking rent has been seen in Inner London with 0.4%. In the South West of England rents have risen by 0.5% and in the South East by 0.6%. Greater London has seen a rent rise of 0.9%.
In the North East of England, rents have risen by 1.3%, in the West Midlands by 1.7% and in the North West and Yorkshire and Humber by 1.9% compared to the last quarter.
But although asking rents have risen again, there are signs that the pace of the rent growth continues to slow down. In the last three quarters, the pace at which rents have risen has decreased.
The monthly rent growth outside of London has dropped to 9.4% from 9.7% in the last quarter. In Greater London, the drop was even bigger. There the annual change is now 14%, compared to 15.7% in the previous quarter.
Supply Still Outweighing Demand
One of the main drivers for the steep increase in rent prices we have seen in the past two years was the lack of supply. And while demand is still outstripping supply, there are signs of more properties coming on the rental market this year.
Overall, there are now 6% more properties available to rent than this time last year, when supply levels were close to record lows.
In the first quarter of 2023, the number of properties for rent on the market was 8% higher.
But compared to pre-pandemic levels in 2019, the number of available properties is down by 46%. The gap between supply and demand is still very large, even though competition has reduced by 2%. However, it’s still 173% higher than in 2019.
Demand has risen further, with enquiries up by 4% compared to the same period last year and 48% higher than in 2019.
We have seen some early signs of improvement on squeezed supply levels this year, though with no significant influx of new properties becoming available to rent currently on the horizon, the mismatch is set to continue for some time. Many agents are having to manage a very high volume of tenant enquiries for every property that they let in the current market.
Tim Bannister, Director of Property Science at Rightmove
The biggest gap between demand and supply, according to Rightmove, is for terraced houses. In this category there are four times more enquiries than there are properties available. However, the property type to find a tenant the quickest is flats.
Official London Rental Figures Shown To Be Too Low
Meanwhile, new research has shown that the official rental figures for London calculated by the Office for National Statistics (ONS) are too low.
Lettings and estate agents Benham and Reeves have analysed renting figures in London and found that the ONS figures are 37% lower.
While ONS figures state that the average rent in London is £1,672 per month, Benham and Reeves have found that the actual figures is £2,285 per calendar month.
Such a big gap between official figures and reality is not helpful, as it could set wrong expectations for potential renters.
Many people may be entering the market with an unrealistic expectation of just what and where they can afford to rent despite having researched the market beforehand.
Marc von Grundherr, Director of Benham and Reeves
