The UK rental market is set for a notable change in pace, with Zoopla’s latest Rental Market Report indicating a projected halving of rental growth to 5% in 2024.
This marks a significant decrease from the current rate of 9.7% and would be the lowest growth rate since September 2021.
In London, the slowdown is expected to be more pronounced, with rental growth forecasted at just 2% for 2024, a steep decline from the current 9%.
Scotland, however, is diverging from the UK trend, with rental growth rates continuing to rise due to factors like rent controls and strong demand.
Edinburgh and Glasgow are leading this trend, with rental growth rates of 15.2% and 13.2%, respectively.
The average rent in the UK currently stands at £1,201 per month, with the highest rents in London (£2,049 pcm), Oxford (£1,611 pcm), and Brighton (£1,565 pcm).
Zoopla has also noted an increase in rental listings with rent reductions over 5%, particularly in areas where rents may have risen too quickly.
Richard Donnell, executive director at Zoopla, provided insights into the shift: “The UK is past peak rental growth which will be welcome news to renters who have seen rents rise by almost a third (31%) over the last three years. London will lead the slowdown, acting as a drag on the UK growth rate.
“The rental market has been stuck in a period of static supply and strong demand which has pushed rents higher.
“Demand has been driven by the strength of the labour market, the re-opening of the economy after the pandemic lockdowns, record immigration and higher mortgage rates making it harder for would-be first-time buyers to buy a home.
“Faster growth in earnings has supported a faster pace of rental growth.
“The supply-demand imbalance in rented housing is not going to disappear in 2024, however, the market is set to become more balanced than it has been over the last three years.
“The slowdown in rental growth over 2024 will be down to a weaker labour market, slower earnings growth and growing affordability pressures limiting the pace at which rents can rise, particularly in southern England.
“Rents have room to rise above the UK average in regional cities where affordability is less of a constraint, but this won’t be the case indefinitely.”
