Average advertised rents in the UK have surged to unprecedented levels, as reported by Rightmove. As of the first quarter of 2024, rents outside London have risen to £1,291 per month, an 8.5% increase from the previous year, while in London, rents have reached £2,633 per month, up by 5.3%. Despite an increase in the number of available rental properties, demand continues to outstrip supply, with an estimated 50,000 additional properties required to return to pre-pandemic levels.

Regions such as Reading and Coventry have notably experienced sharp increases, with rental growth rates reaching nearly 20%. The escalation in rental prices is attributed to a blend of high demand, constrained supply, and landlords’ need to cover higher costs due to rising interest rates. Although the pace of rent increases is showing signs of slowing, the market remains challenging, particularly due to ongoing imbalances between supply and demand.

Rental price reductions are reportedly at a five-year high, particularly affecting larger properties. Rightmove’s director of property science, Tim Bannister, acknowledged some easing in the market for tenants, though significant issues persist. Simon Thompson from Miles & Barr suggested that the tightening of stock over the summer might lead to fewer price reductions.

The dynamics in the home buyer market are also shifting, with smaller properties, including flats, experiencing rapid price hikes. This trend is driven by first-time buyers adapting to new economic conditions and prioritizing smaller, more affordable homes amidst high borrowing costs.