London, one of the top global property markets, has consistently maintained a higher level of residential rental growth since 2010, according to a latest report by Hometrack.
“Rental growth and rental affordability - July 2017 Report” by Hometrack said, “London has recorded higher levels of rental growth since 2010 averaging 4.5% per annum with periods of weaker inflation in 2013 and now in 2017. Strong employment growth in London over this time, 2-3x faster than other regions, has increased rental demand.”
In many ways, house price inflation is contributing to growth in rent in London as demand outstrips supply. High house prices and tighter mortgage regulation have made it harder for first-time buyers to transition from renting to buying, further sustaining demand for rented housing. Rents have tracked earnings over the long run. Rental affordability is worst in London while it is the best for a decade in regions outside southern England.
Overall, residential rental growth over the last decade has ranged from +45 per cent to -7 per cent across regions. The variance is largely explained by local economic factors. The stock of private rented homes has grown by 1.1m (31 per cent) since the global fiscal crisis.
The demand for rented housing has also grown, but the impact on rents varies widely. While rents increased by 45 per cent in London, and over 20 per cent in southern regions, rents elsewhere have been broadly flat in nominal terms with weaker growth in employment and earnings failing to offset the fall in rents recorded in 2008/9, the report observed.
Rental growth has varied widely over the last decade from flat to growth of over 45%. Rental affordability is the most stretched in London while in the regions the affordability of renting is the best for a decade