The last two years have witnessed a boom in house prices, with the average property in October 2021 commanding £24,000 more than it did a year previously. * This dramatic rise has forced many potential first-time buyers to remain in rental accommodation for longer.
UK rental prices, in turn, increased by 8.6% between November 2020–21. ** Despite this, Zoopla’s recent market report shows that affordability remains roughly the same, with 37% of a single tenant’s income spent on rent.
However, some regions have been significantly affected as workers from more populated areas retreated to the countryside, drying up an already holiday-centric rental market. This has spiked demand in rural heartlands such as the South West, which also contends with lower wages.
What will 2022 bring?
Zoopla also reported that overall demand for rental homes has increased by 43% while supply has dropped by the same amount, based on a five-year average. Thanks to fluctuating movement patterns and remote working, renting is likely to remain a problem in places where affordable rental stock is already thin on the ground.
The pressure on rural hotspots may ease now workers and students are being encouraged back into urban centres, but this also means an uptick in city prices.
While London’s rental prices are still lower than pre-pandemic levels, we can expect this to increase as supply dips in the coming months. Zoopla’s data shows there has likewise been a 60% hike in demand in Birmingham.
Alongside underinvestment in social housing and fewer landlords, the pandemic has created an unbalanced situation that’s likely to increase rents by 4.5% in the UK and 3.5% in London.***
The good news? Now is a great time for landlords to invest in quality housing to make a strong return while easing pressure on the rental market – a win for tenants too.
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