London rents soar at fastest pace in more than a decade

LONDON – Rents in London are rocketing at their fastest pace in more than a decade as private tenants fight over a dwindling supply of homes.

Private rents in the capital jumped 4.8 per cent in March compared with a year ago and further increases across the United Kingdom are expected over 2024, the Office for National Statistics (ONS) said on Wednesday.

The figures underscore the huge imbalance that remains in the rental market with 10 prospective tenants for every available property, according to Propertymark, the trade body for estate agents.

Supply is being strained by a lack of new housing and an exodus of landlords facing pressure from higher mortgage costs combined with a tax and regulatory clampdown.

Meanwhile, there has been a huge increase in demand for rental properties, particularly from younger generations struggling to get on the property ladder.

The capital’s housing crisis is laid bare by new data compiled by Molior London and seen by Bloomberg News. It shows sales and construction completion levels for newly built properties in London have plummeted to their lowest level in around a decade as buyers dry up.

“Private renters continue to be squeezed from multiple angles, including the impact of double-digit inflation on consumer goods and services,” said Mr Barret Kupelian, senior economist at PwC UK.

“The ONS’ latest data demonstrates that the dream of getting on and climbing the property ladder might, therefore, remain out of reach despite lower house prices.”

London suffered its fastest increase in private rents since December 2012 but even bigger increases were seen in the East Midlands and Northern Ireland. Overall rents in the UK rose 4.9 per cent in the year to March, up from 4.8 per cent the previous month.

The wider housing market continued to stall in official property price data.

Average prices have fallen 2 per cent from their peak to £288,000 (S$478,000) in February but are still 5.5 per cent up from a year earlier. The year-on-year increase was weakest in the capital at 2.9 per cent and biggest in Northern Ireland, where prices jumped 10.2 per cent.

Housing slump

However, unofficial data from Nationwide Building Society suggests Britain is enduring an even bigger housing slump.

Its monthly report found that prices have dropped 3.1 per cent in the 12 months to March, the sharpest annual pace since 2009 in the depths of the global financial crisis. It points to a near 5 per cent plunge in prices from the peak.

“Affordability will remain a significant barrier to a home purchase for many over the coming months, given that mortgage rates probably have reached a temporary floor for now,” said Ms Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.

“We continue to expect a peak-to-trough fall in house prices of about 8 per cent.” BLOOMBERG