The average price of rent in London has hit a record high of £2,631 per month, and is forecast to grow by three per cent more this year, a new report has found, but the market may hit an “affordability ceiling”.
However, the study by property portal Rightmove said that this is just four pounds higher than the previous quarter, as the yearly increase of rents in London halves from 12 per cent last quarter, to six per cent now.
Tim Bannister, director of property science at Rightmove, said: “The trend of rent growth gradually slowing continues, with an improvement in the supply and demand of rental properties having a big contribution to that.
“We can’t keep seeing double digit rent rises every year as tenant affordability simply cannot keep up, and 2024 is the year we think there will be a much smaller increase in advertised rents of five per cent outside of London, and three per cent in the capital.”
Consistent interest rate hikes made by the Bank of England last year in efforts to reduce inflation have damaged the entire ecosystem of the housing sector.
Landlords began either selling their properties to dodge rising mortgage payments – limiting the pool of supply – or passing high costs onto their tenants.
Lodgers also began offering above the asking price to secure a room or flat leading to bidding wars.
Rightmove said today more tenants are beginning to hit an “affordability ceiling”, further contributing to slowing rent rises.
Figures also show the number of tenants sending enquiries to letting agents to move is 13 per cent lower than the same period last year.
At the same time, the number of new rental properties coming onto the market is seven per cent higher than last year.
Rightmove said: “To put this into perspective, the average number of enquiries agents are receiving for every available rental property is currently 11, which while still nearly triple the four at this time in 2019, is down from 14 in 2019.”