Currently, the rental market is grappling with a persistent disparity between supply and demand. The situation is worsened by rising mortgage rates, making it challenging for first-time buyers to access homeownership, thereby driving up demand for rental properties. Rental enquiries per estate agency branch have surged to 46% above the 5-year average.
Although there has been a slight uptick in rental supply in recent weeks due to a weakening sales market, the average number of homes for rent per estate agency branch stands at 10, which is an improvement from a low of 7 recorded at the end of September. However, the overall stock of homes available for rent remains 38% below the 5-year average and 4% lower than November 2021.
Rental inflation currently stands at 12.1% per annum, significantly surpassing earnings growth (6%).
There are no indications of a slowdown due to the persistently imbalanced supply/demand scenario.
Demand remains remarkably high, surpassing the average by 46%, while the total supply of rental properties lags, being 38% lower than average.
The largest cities in the UK are witnessing the most rapid rent growth rates.
Rental affordability for a single earner has hit its highest point in over a decade, with rental costs consuming 35% of the average weekly earnings.
There is a noticeable surge in demand for one-bed flats as renters seek better value.
However, stretched rental affordability is expected to impact demand and slow down the pace of rent increases in the first half of 2023.
Rent growth is projected to taper off to 4-5% by the end of 2023.