The rental market is seemingly boiling over with average rent prices soaring on a continuous rise every month this year. But what is actually happening within the market? Specifically, the second quarter of the year and the past few months have vividly shown just how intense the market is getting.
Rental prices in Q2
The second quarter of 2022 saw record-breaking statistics in the rental market with the national average rent outside London reaching £1,126 per month, constituting a 3.5% rise from Q1 and a whopping 11.8% higher than 2021!
Since the outbreak of Covid-19, over the past two years average rent prices outside of London are up an enormous 19% which took 8 years to reach pre-pandemic. In London alone, the average rent asking price has hit a record breaking £2,257 with the growth over each year passing 15% - this is the highest rate of any region ever recorded. This quarter alone, with its 3.5% rise, brings it to the second highest quarter increase in ten years.
Despite this, the number of new rental properties entering the market has shrunk from last year with available properties down 26% whilst rental demand is up 6%.
The huge growth is predicted to continue with Rightmove estimating a 5%-8% increase in rent by the close of 2022 with a high demand for rental properties yet a limited number of available properties.
A closer look at July
This was the highest growth across 12 months witnessed since December of 2008. With a specific hotspot in the East Midlands being subject to the highest annual growth in rent of 4.3%, and London at the lowest with a rise of 2.1%. RICS also found a hike in property demand by tenants across July. The rental prices reflect the changes and patterns in increasing supply and demand across the last 12 months.
The number of available rental properties across London had dropped a staggering 38% in London over the past year despite tenant enquiries sky rocketing growing by nearly two thirds. 45% less landlords were willing to lower their asking price in comparison to last year's prices.
With competition in the rental market hotter than ever, tenants are attempting to offer landlords full rent in advance and are offering rent over the asking price to secure property.
August 2022
With costly pressures plaguing the UK this August, the housing prices are set to slightly cool. August witnessed a 0.8% increase in rent prices continuing the rising pattern for the 13th month in a row which, from two years ago. However, this increase has slowed from July, hence the cooling.
September & October Predictions
But what happens next? Well, with rising energy costs and interest rates the rental market demands from landlords are not likely to reduce any time soon.
The housing market hit boiling point through the pandemic as the government rolled out schemes such as the stamp duty holiday allowing many more people to buy houses they usually wouldn't have. With this in mind and the pandemic seemingly a thing of the past the market is set to stabilise but not necessarily dip in prices, meaning the rental market will remain incredibly active.
