Zoopla’s latest rental market report reveals that better days might be ahead of us renters after all as the growth rate of rents is finally slowing down and it’s projected to halve in 2024.
The property portal website is regularly updating us on the subject of renting vs buying with its insightful property market analysis. Zoopla reports that the rental price inflation in the UK has dropped to 9.7% from 11.9% a year ago. And at this rate, it predicts this number to halve to 5% in 2024, which would be the lowest since 2021.
This is great news indeed! However, let’s not get too excited as while rent growth is slowing down, it’s not stopping just yet. But looking at the bright side, this is (hopefully) signalling the tide of the rental market turning with the prices of rents hopefully going down in the near future.
Zoopla reports rent growth is set to halve in 2024
Recently, Zoopla revealed that renting has become cheaper than first-time mortgages for the first time in 13 years. And today, the property market experts report that the rise of rent prices is set to slow down and the rate will drop to 5% in the new year, which would be the lowest it has been since September 2021.
‘Key factors impacting the rental market include the jobs market, earnings growth and affordability,’ says Richard Donnell, executive director at Zoopla. ‘With a weaker jobs market and slower earnings growth predicted for next year - this will have a knock-on effect on the rental market.’
But not every area of the UK will be impacted equally. Surprisingly enough, London’s rental prices are set to increase in 2024 the least, only by 2%. Meanwhile, Scotland’s continued high demand to secure rental homes is likely to result in the steepest rental growth, which currently stands at 15.2% in Edinburgh and 13.2% in Glasgow.
‘Rents will be hit first in London as it's the most unaffordable market in the UK by some margin with average rents of £2,125 per month,’ Richard explains. ‘This worsening affordability will lead to a drop in the number of renters searching for homes in London, and a drop in asking rents as a result. In comparison, regional cities like Manchester, Bolton and Newcastle are continuing to see strong demand from renters and have greater headroom for rents to increase relative to earnings.’
So while we are not out of the woods just yet, this report shows that things are slowly but surely changing for the better and we are past the peak rental growth in the UK as a whole.
‘The turn in the rental market will be a long and steady process over the next 12 months. Zoopla expects rental growth in London to finish at +2% next year, down from 9% today - while at a nationwide level rental growth will slow to +5% - half what it is today,’ Richard concludes.
