London’s rental prices are no longer the fastest growing in the country. Other regions have outstripped the capital, with the south west the leader with a whopping 15.5 per cent growth in the last year.
According to Homelet, UK rental prices for the three months to April rose by 10 per cent, and by 7.4 per cent outside London. The average monthly rental price for the UK is £916, falling to £730 when the capital is excluded.
These figures hid the great variance in prices, however, with London sitting atop the pile. The average rental price for a new contract signed in April was £1,436 in the capital, with no other region getting with £500 of that figure.
Wales was the cheapest place to rent, with the average contract costing £573 a month during April.
The growth rates tell a different story: London has slipped to fourth on this table, at an annual rate of 7.5 per cent, putting it behind the West Midlands, East Anglia and the south west.
Why it’s interesting
London is usually ahead of other regions for rental price growth, and the figures imply that a surge in rental price growth in the capital was something of an outperformance, and that other regions are now catching up. The last time there was something close to parity was after the financial crisis.
It could also be a reaction to last year’s booming house price growth, meaning more people are being tempted to rent as house prices continue to rise faster than wages. Before the crisis, wage growth was typically between four and five per cent, but is now just 1.9 per cent, according to ONS figures.
What Homelet said
For the first time we are seeing rent price growth rates in Greater London converge with those across the rest of the UK. During 2014, London rent price growth far outpaced other regions but in 2015 we are seeing the emergence of a different pattern.
What this tells us is that the private rental market is experiencing demand nationwide and that it is not simply a London phenomenon that increasing numbers of people are requiring privately rented property.
Both investors and renters will have to reconsider the rental landscape, with faster growth in regions with lower house prices perhaps offering a greater return on investment.