Zoopla: Two speed rental market developing
Rents are falling in London and Edinburgh but demand is pushing them up outside those cities, Zoopla’s rental market report has found.
When London is taken out of the equation rental growth currently stands at 2.2% across the UK, but inside the capital there is rising supply and less demand, especially as you get more central.
In London rents have fallen by -3% by the start of the year, while Zoopla expects the decline to reach up -5% by the end of the year.
The popularity of working from home, as well as reduced international travel, has significantly affected demand.
In Edinburgh, which is the second most popular UK holiday destination, rental growth has also slowed to 0.2% in the past 12 months.
Gráinne Gilmore, head of research at Zoopla, said: “The future path of annual rental growth will be determined largely by the economic outlook, especially the rise in unemployment and the future path of average earnings.
“However, as new rental supply continues to catch up with demand levels, we could see further softening of headline rental growth by the end of the year, although there will be some areas of outperformance.
“Uncertainty continues over how any further outbreaks of COVID will impact the resumption of office life, student life and tourism, and this uncertainty will impact demand in some markets during the rest of the year.”
Cities like Bradford, Sheffield, Cardiff and Newcastle have all seen heightened supply and demand.
Franz Doerr, founder and chief executive at flatfair, said: “News that London’s rental prices have fallen will be welcome news for renters in the capital, hefty upfront move-in costs can still be very difficult for people to scrape together up and down the country.”