Rents in London are rocketing at their fastest pace in more than a decade as private tenants fight over a dwindling supply of homes.
(Bloomberg) — Rents in London are rocketing at their fastest pace in more than a decade as private tenants fight over a dwindling supply of homes.
Private renters in the capital saw a 4.8% jump in prices in March compared to a year ago with further increases across the UK expected over the next year, the Office for National Statistics said Wednesday.
The figures underscore the huge imbalance that remains in the rental market, with 10 prospective tenants for every available property, according to Propertymark, the trade body for estate agents.
Supply is being strained by a lack of new housing and an exodus of landlords facing pressure from higher mortgage costs combined with a tax and regulatory clampdown. Meanwhile, there has been a huge increase in demand for rental properties, particularly from younger generations struggling to get on the property ladder.
The capital’s housing crisis is laid bare by new data compiled by Molior London and seen by Bloomberg News. They show sales and construction completion levels for newly built properties in London have plummeted to their lowest level in around a decade as buyers dry up.
“Private renters continue to be squeezed from multiple angles, including the impact of double-digit inflation on consumer goods and services,” said Barret Kupelian, senior economist at PwC UK. “The ONS’s latest data demonstrates that the dream of getting on and climbing the property ladder might therefore remain out of reach despite lower house prices.”
London suffered its fastest increase in private rents since December 2012 but even bigger increases were seen in the East Midlands and Northern Ireland. Overall rents in the UK rose 4.9% in the year to March, up from 4.8% the previous month.
The wider housing market continued to stall in official property price data. Average prices have fallen 2% from their peak to £288,000 ($358,000) in February but are still 5.5% up on a year earlier. The year-on-year increase was weakest in the capital at 2.9% and biggest in Northern Ireland, where prices jumped 10.2%.
Housing Slump
However, unofficial data from Nationwide Building Society suggests Britain is enduring an even bigger housing slump.
Its monthly report found that prices have dropped 3.1% in the 12 months to March, the sharpest annual pace since 2009 in the depths of the financial crisis. It points to a near 5% plunge in prices from the peak.
“Affordability will remain a significant barrier to a home purchase for many over the coming months, given that mortgage rates probably have reached a temporary floor for now,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics. “We continue to expect a peak-to-trough fall in house prices of about 8%.”
(Adds data on slump in home sales and construction completions)
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