10:02 AM, 5th August 2020, About 11 months ago
Hometrack has released its latest index for the second quarter of 2020 with analysis showing diverging trends in supply and demand of rental property between London and the rest of the UK.
Average rents across the country dropped by -0.3% in June, and by -0.8% in the second quarter 2020, taking the annual growth in rents to +1.1%, down from +1.7% a year ago.
However, rental growth if you exclude London is up +2.2%, as demand continues to outstrip supply, but in London rising supply and weaker demand is depressing prices into negative growth figures.
Hometrack reported that: “Inner London was seeing the greatest downward pressure on rents as the working from home policy and reduced international travel and tourism impact the pool of demand for rented property, while available supply has increased.”
Outside London and Edinburgh Hometrack said: “Rental demand was more resilient during lockdown than demand in the sales market, and although levels are starting to moderate, they are running 33% higher than pre-lockdown, and 25% above 2019 levels across the UK as pent-up demand comes back to the market. Renters may have used lockdown as a chance to reassess how and where they are living, further boosting rental market activity.”
Director of Benham and Reeves, Marc von Grundherr, commented: “A reduction in the cost of renting across the capital will be welcomed by all, even if the circumstances of this reduction are far from ideal.
This has undoubtedly been led by a move away from the workplace with the draw of living in the city no longer as strong as it once was.
As a result, we may well see the cost of renting in London’s outer boroughs and the wider commuter zone start to lift as demand increases, while inner London could remain largely flat for the remainder of the year.
However, London remains one of the most sought after pockets of the international rental market and once this international travel starts to return to the capital, demand will once again outweigh supply and this will no doubt cause rental costs to start climbing once again.”
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