The average UK rent price has risen to yet another new high, although supply and demand is starting to even out.
Advertised UK rents outside London reached an average of £1,280 (€1,500) per month in the final quarter of 2023, according to a report from property site Rightmove.
Despite the price figure reaching a record high for the 16th month in a row, the figure is only a £2 (0.2%) increase on the July to September figure.
Looking at annual changes, advertised rents are now 9.2% higher than last year, the lowest annual growth rate seen since 2021.
“We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up,” said Rightmove director Tim Bannister, commenting on weakening demand.
According to the new report, rising rental costs are making it more difficult for tenants to rent new properties, meaning that more landlords are being forced to lower their prices.
The number of tenants sending moving enquiries to letting agents is now 13% lower than last year.
Putting this into context, this means that agents are receiving 11 enquiries for every available rental property, down from 14 last year, but still far higher than the four received in the same period in 2019.
“The market is still very busy compared to pre-pandemic levels,” Righmove said in a statement. “However, these early signs suggest a better experience for many tenants trying to secure a rental property in 2024.”
One reason why analysts are more upbeat about the coming year is that the supply of rentals is slowly increasing.
The new report shows a 7% annual increase in the number of properties coming onto the market, a trend that could help to contain rent prices which have been inflated by unmet demand.
Despite these overarching trends, Rightmove pointed to wide regional differences in the UK’s rental market.
Compared to the national average monthly bill of £1,280, London rents hit a new peak of £2,631 (€3,083) in the final three months of 2023, a quarterly rise of £4, and a yearly increase of 6%.
At the other end of the price scale, the North East is the cheapest place to rent in the UK, with an average monthly cost of £865.
Only three regions: Scotland, the South West, and the South East, saw drops in average advertised rents in October to December 2023, compared with the previous three months.
When considering rising property prices, it is also important to bear in mind inflation and wage growth to determine the true effect of rental trends on tenants.
The latest figures from the Official for National Statistics (ONS) on housing affordability, released at the end of October, cover the financial year ending in March 2022.
They show that, in England, private renters on a median household income could expect to spend 26% of their earnings on a median-priced rented home, compared with 23% in Wales, and 25% in Northern Ireland.
London is classed as the least affordable region, with an average rent equivalent to 35% of average income.
Looking to the year ahead, Rightmove predicts average rents will rise by 5% outside of London and 3% within the capital.