Annual growth in UK rents falls to 1.1% in June – Zoopla

Average rents across the UK dipped by -0.3% in June, and by -0.8% over the second quarter of the year, to take the annual growth in UK rents to +1.1%, new data from Zoopla has revealed.

The property expert revealed that the latest annual growth figure was down from +1.7% a year ago.

However, Zoopla’s latest Rental Market Report also indicated that a “two-speed market” has emerged between London and the rest of the UK. Data showed that rental growth in the UK excluding London is up +2.2%, as demand continues to outstrip supply in many markets.

Zoopla stated that a different trend is emerging in London, however, with rising supply and weaker demand – particularly in inner London – resulting in negative rental growth. The data also highlighted that Edinburgh has seen a marked slowdown in rental growth to +0.2% over the past year, as a result of reduced tourism and policy changes impacting landlords and the supply of property.

Zoopla’s report showed that the rental markets of London and Edinburgh stand apart from other UK cities in the UK, as a rise in supply in these markets, which is increasing choice for renters, is not being matched by similar levels of demand – leading to downward pressure on rents and the rate of rental growth.

Zoopla head of research, Gráinne Gilmore, commented: “The future path of annual rental growth will be determined largely by the economic outlook, especially the rise in unemployment and the future path of average earnings.

“However, as new rental supply continues to catch up with demand levels, we could see further softening of headline rental growth by the end of the year, although there will be some areas of outperformance.”

The report also suggested that rental demand was more resilient during lockdown than demand in the sales market, and although levels are starting to moderate, they are running 33% higher than pre-lockdown – and 25% above 2019 levels across the UK as pent-up demand comes back to the market.

Zoopla indicated that renters, like homeowners, may have used lockdown as a chance to reassess how and where they are living, to further boost rental market activity.

“Uncertainty continues over how any further outbreaks of COVID-19 will impact the resumption of office life, student life and tourism, and this uncertainty will impact demand in some markets during the rest of the year,” Gilmore said.

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