Average UK rental prices stabilise at GBP970
The rental market in the UK appears to have recovered from what was a difficult start to 2012, according to residential property specialists Move with Us.
The company’s first Rental Index report covering Q3 2012 shows that average rent fell slightly early in Q3, before recovering in September.
Prices remain at around GBP970, a slight decline from the Q2 average. Over the last 12 months, prices have increased by two per cent, adding around GBP20 per month to the average rent.
Robin King, director, Move with Us, says: “The index confirms a consistent and increasing demand for rented properties across all regions. Many aspiring homeowners struggle to qualify for mortgages which is leading to increased demand in the rental sector. These long-term renters are demanding higher quality accommodation and look to stay for much longer than we have previously seen.”
Over the past fifteen months, London has seen large fluctuations in rents including a period of price inflation in the lead up to the Olympics. Rental prices are still more than twice the national average but have fallen back to more affordable levels in Q3. The last quarter has seen London rental prices stabilise at around GBP2,270 after falling from an Olympic induced high of GBP2,411 in June. They now appear to be recovering from this setback as rents increased by 0.2 per cent in the last two months of the quarter.
Yorkshire and Humber has one of the lowest and most stable average advertised rental rates in Great Britain, so a seven per cent increase in rents was unexpected. The average rent is now closer to the rest of the North and Midlands, at around GBP602 per month, compared to GBP559 at the beginning of the quarter.
“Overall, we should expect further rent increases in Q4, with the majority of regions continuing along their current trends. However, these may be short-lived as the economic effects of low wage inflation coupled with higher energy and fuel costs start to bite,” says King.
Rents in the South East are significantly higher than the rest of the UK due to its close proximity to London. Q3 has seen the average advertised rents peak at GBP1,120 per month before returning to around GBP1,110 at the end of the quarter. Average rents remained between these two figures over the quarter without significant fluctuation.
The third quarter began with steady advertised rent increases in the South West, contrasting with much higher growth rates registered in the previous quarter. Rent inflation accelerated from August, averaging 0.5 per cent per month. The total increase in average rents over the quarter stood at GBP9 or 1.2 per cent. Rents have recovered with sustained growth from May, hitting a peak of GBP787 and showing no signs of decline in the next quarter.
Landlords across East Anglia have seen a two per cent increase in advertised rents in Q3, marking a third successive quarter of growth. This is in keeping with the steady growth characterising 2012. Prices recovered by four per cent between February and September, following a difficult second half of 2011. There was a small decline in September, leaving rents averaging GBP871 per month.
Rental price increases in the East Midlands accelerated in Q3 relative to Q2. This took rents to 3.5 per cent above their July 2011 levels, with monthly rents rising from around GBP587 to over GBP600 between July and September. The current trend suggests the average rent will rise further for the remainder of the year.
The West Midlands had an encouraging start to the quarter, with advertised rental prices recovering from an early drop and stabilising at around GBP655 in late August. Unfortunately, the start of September saw rents drop to GBP651 after a quarterly high of GBP659. This region has been fairly stable and robust since the start of the index in July 2011. The next quarter may see further decline, but the average rent is likely to remain at around GBP650 in the long term.
The North East appears to be on the up, recovering from the 4.5 per cent decline in advertised rents that took hold in the first half of 2012. The current average rent is GBP16 lower than the year’s highest point, with the current average at GBP651. There has been an overall increase of around 0.5 per cent since the same period in 2011 and a two per cent increase from the start of the index.
The North West is experiencing slight increases in average advertised rents, after recovering from a large fall in rental prices at the end of 2011. This quarter has seen a return to rental price growth after a 0.5 per cent drop in the latter part of the last quarter. There was a two per cent increase between July and mid-September, though rents did decline in the last two weeks of the period. The current average advertised rent stands at around GBP620 per month at the end of September, marking a GBP17 increase from the previous year.
The average advertised rents in Wales behaved in a very similar way to the rest of the UK in the last quarter, with sharp increases after a six per cent decline in the first half of 2012. Wales had the second largest rise in rental price of any region in Q3, with a 5.6 per cent increase from GBP604 to GBP640 over a three-month period. Rental price levels remained at this level to the end of the quarter, suggesting that this is sustainable.
Advertised rental price levels in Scotland have remained below the July 2011 rate for the final part of 2011 and much of 2012. This quarter has been no exception, with a fall of around one per cent after an initial increase of 1.3 per cent. Signs of a recovery in August were dashed by a further 0.25 per cent decrease, leaving rents at close to two per cent lower than those experienced in July 2011 levels and 1 per cent lower than the same period last year. Average rental prices in Scotland, at GBP657, are GBP337 below the British average. The current trend suggests a further decline over the coming quarter, though there is the possibility of a slight recovery in Q4 from a higher base than in 2011.
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