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Rental Stock Bottoms Out

24.08.22

According to the latest Hamptons index, rents have risen by an average of 8.3% over the last 12 months, down from +11.5% in late Spring.

But that’s still the sixth-strongest annual increase of the last decade, and means rents are 15.7% above where they were when Covid struck.

Rental growth is now being driven by a bounce-back in urban markets, particularly for smaller city-centre homes. One-bed rents rose by an average of 10.4% year-on-year, while four-beds are up 6.6% annually. The average one-bed now costs 13.6% more than pre-Covid times compared to four-beds that are 17.6% above pre-Covid levels.

Inner London continues to recover harder and faster than anywhere else. Here, average rents are up 33.6% on the same time last year, when the market was in a “post-Covid trough.” A more useful comparison is with January 2020; inner London rents are currently just 1.5% above where they were in this pre-pandemic month – and still on par with July 2016.

The capital’s sharp recovery “will work its way through in a couple of months, likely bringing down the year-on-year figure significantly.”

The number of homes available to rent continued to fall in July. There were 9% fewer rental properties available in July than at the same time last year, and 52% fewer than two years ago. London recorded the sharpest fall in stock anywhere in the country, down 37% year-on-year. Stock levels are now so low that July saw more homes come onto the market than there were homes still on the market from previous months, the first time this has happened since 2012.

Meanwhile suburban and country markets have quietly recorded small rises in stock levels and have seen rental growth soften.

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