According to Rightmove, demand for flats in cities outstripped demand for houses during autumn. As a result, it seems like the ‘race for space’ – a distinctive feature of the property market during the Covid-19 pandemic – could be subsiding. Does this mean rent in cities has finally started to go down? Let’s find out.
[top_pitch]
Why are so many Brits moving back to cities?
During the pandemic, city centres started becoming less attractive places to live, especially for those who weren’t going into the office. To make things worse, Brits couldn’t enjoy entertainment attractions, and they couldn’t socialise. For these reasons, Brits started moving out of cities, prioritising more space and lower rents.
However, when the vaccine rolled out and the government eased restrictions, many businesses started encouraging a hybrid, rather than a fully remote working model. This attracted more property hunters to cities, a sign that things were beginning to get back to normal.
Are rents in cities finally going down?
According to the Hamptons Monthly Lettings Index, rents in Inner London fell for the 21 consecutive months to April 2021.
However, when signs started indicating that ‘normal’ office life was resuming, rents in London’s 13 Inner boroughs started rising. In fact, rents have risen by 3.9% since November last year. The rise has also been facilitated by students beginning a new academic year and life slowly returning to normal in London.
As of November 2021, the average rent in Inner London was £2,329.
[middle_pitch]
What is the average UK rent for different regions?
Data from the Hamptons Monthly Lettings Index reveals the following:
|
|
November 2020 |
November 2021 |
Year-on-year change (%) |
Year-on-year change (£) |
|
Greater London |
£1,870 |
£1,944 |
3.9% |
£74 |
|
– Inner London |
£2,241 |
£2,329 |
3.9% |
£88 |
|
– Outer London |
£1,800 |
£1,870 |
3.9% |
£70 |
|
South East |
£1,127 |
£1,262 |
12.0% |
£135 |
|
South West |
£896 |
£1,027 |
14.6% |
£131 |
|
East of England |
£1,017 |
£1,104 |
8.5% |
£87 |
|
Midlands |
£724 |
£775 |
7.0% |
£51 |
|
North |
£686 |
£741 |
8.0% |
£55 |
|
Wales |
£667 |
£755 |
13.2% |
£88 |
|
Scotland |
£700 |
£744 |
6.3% |
£44 |
|
Great Britain |
£1,050 |
£1,133 |
7.9% |
£83 |
|
Great Britain (ex. London) |
£839 |
£924 |
10.1% |
£85 |
The data above shows that it’s still most expensive to rent in Inner London. However, rent in the capital is currently 11.6% less than it was in January 2020.
Rents outside the capital have risen approximately three times (16.1%) as much as those in London (5.9%) since the pandemic began. In fact, the South West has seen the highest growth (23.5%) since January 2020. This is mainly due to low supply and high demand.
Is it better to rent or buy a home going into 2022?
Buying a home is generally thought to offer more benefits than renting, but keep in mind that it depends on buyers’ individual needs and circumstances. It’s up to you to review your situation and choose the best option for you.
That said, it would be unwise not to consider the government incentives to get on the property ladder currently. Take some time to go through the government schemes available and consider ways to save money on mortgages.
Will rents come down in 2022?
The Hamptons Monthly Lettings Index recognises that rents across Great Britain have risen by about 7.9% due to an imbalance of supply and demand. And though there are signs that stock levels are increasing, rental prices might not go down rapidly.
Additionally, it’s expected that affordability barriers might set in as households start facing pressures due to the increasing cost of living and higher energy crisis. These factors might slow down rental growth.
