The rental market in Great Britain experienced a significant shift towards the end of 2024, with rental prices outside London decreasing for the first time since before the pandemic. This change, highlighted by Editor of the FT, Roula Khalaf, represents a crucial moment in the country’s housing market after years of escalating rents.
Key Points:
1. Average rental prices outside London dropped by 0.2% to £1,341 in the fourth quarter of 2024, marking the first decline since 2019.
2. In London, prices saw a modest 0.1% increase to £2,695, the lowest growth rate since 2021.
3. Over the past three years leading up to the fourth quarter of 2023, rental prices in Great Britain excluding London had risen by 25%, driven by factors such as high borrowing costs and limited property availability.
The easing demand for rental properties is evident through a 16% decrease in tenant enquiries compared to the previous year, with some renters choosing to purchase homes due to favorable mortgage rates and rising incomes. This trend has also seen some tenants opting to stay in their current residences to avoid moving costs. The increase in rental property supply in late 2024, up by 13% from the previous year, has contributed to alleviating the pressure on the housing market.
Despite some landlords exiting the market, there are indications of continued investments from other larger landlords. However, the average number of applications per rental property remains high at 10, suggesting a competitive market. With upcoming changes to stamp duty thresholds and potential legislation affecting renters’ rights, the rental market landscape may undergo further transformations.
Conclusion:
The recent fluctuations in rental prices in Great Britain signify a notable change in the housing market dynamics. The shift towards lower rental rates outside London, coupled with changing tenant preferences, hints at a new phase in the rental sector. As market conditions continue to evolve, it is essential for both landlords and tenants to stay informed and adapt to the changing landscape of the housing market.
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