Real Estate Rental market

As we enter the final month of 2024, the days are getting colder, but many of you are likely enjoying the unique pleasures this season has to offer. This year has been marked by ongoing economic instability, with rising costs of living and housing expenses affecting many people. In this newsletter, we’ll review the changes in the London real estate market throughout 2024 and provide insights into what to expect in the coming year.

Persistent Rent Increases in the Real Estate Market
Over the past three years, the UK rental market has seen significant rent increases, particularly in lower-cost areas. As of October 2024, the average rent for newly-let properties stands at £1,270 per month, with an annual increase rate of 3.9%—the lowest in the past three years. However, rent growth has continued to outpace average income growth, underscoring the impact of the ongoing supply-demand imbalance in the market. Rent for newly-let properties has risen by £270 per month (27%), adding up to an annual increase of £3,240 since 2021, compared to an average income growth rate of 19% over the same period.

On the supply side, the number of rental properties held by agents has increased by 12% compared to last year, but it remains below pre-pandemic levels. Meanwhile, demand for rental properties has decreased by 29% year-on-year but is still higher than pre-pandemic levels. While this narrowing of the supply-demand gap has helped moderate rent growth, the issue of supply shortages is not expected to be fully resolved in 2025, and upward pressure on rents is likely to persist.

Looking at trends across different regions of the UK, areas with lower rental prices, such as Northern Ireland and the North East, have seen higher growth rates, while high-rent areas like central London have experienced a slowdown in growth. However, the average rent across Greater London has reached approximately £2,200 (compared to around £2,150 in 2023), reflecting the continued imbalance between supply and demand.

The Real Estate Market Outlook for 2025
Looking ahead to 2025, rents for newly-let properties are forecast to rise by another 4%, with increases concentrated in lower-cost areas. Additionally, potential tax reforms and regulatory changes may lead some landlords to exit the market, exacerbating the supply shortage further.

Both renters and property owners will need to stay informed about these market trends and consider appropriate strategies to navigate the evolving landscape.

If you have any questions, please contact Kens Estate.
Enquiry Kens Estate: enquiries@kensestate.com

Reference: 

- https://www.zoopla.co.uk/discover/property-news/rental-market-report/

-https://fraserbond.com/blog/article/2024-london-rental-market-overview-prices-demand-and-future-outlook-b9440