2017 could be the first time since the 1930s that more homes are let than sold

September was a record month for activity, notes Countrywide

Uncertainty in the sales market is continuing to drive record activity levels in the rental market, says Countrywide, but a big North-South split has emerged in terms of price growth.

New city lets in the North have been rising by an average of 4.6% faster than in the South this year, as rental growth continued to slow across most cities in Southern England.

The rate has carried on unabated in the North, where all top ten cities for rental growth in 2016 so far are to be found.

Manchester’s 7.1% increase is now the fastest in the UK, with York, Leeds, Liverpool and Glasgow making up the rest of the top five.

At the other end of the spectrum, Oxford, Cambridge and London have seen the biggest slowdown in growth – all three have dropped at least five places from last year’s index. In the capital, rents are rising fastest in outer London; central and inner areas have seen little change since last year.

Overall, the average new let price has risen by 2.2% over the last 12 months, down from 2.8% in the same month in 2015 and the smallest September increase recorded for four years.

Unsurprisingly, the proportion of landlords cutting the asking rent has doubled over the last 12 months in cities in Southern England. Cambridge (18%) and London (17%) saw the biggest proportion of homes with a cut in the asking rent. 

Countrywide says the spike in supply since April’s Stamp Duty change has given tenants more choice, increased competition among landlords and slowed the rate of rental growth.

Johnny Morris, Research Director at Countrywide: “A different type of two speed rental market is emerging, with falling stock and growing demand driving rental growth in many Northern cities at a higher rate than those in the South.  

“With London rents growing at the slowest rate since the downturn (2008) and Northern cities recording rent rises three times as large as their Southern counterparts, there are signs that the North-South rental divide is starting to close. Although at current rates it would take at least five years for the gap between rents in the South and North to close back to 2010 levels.

“As some would-be buyers and sellers sit on their hands, Brexit-induced uncertainty has continued to boost to the rental market. Overall this is yet to stoke rental inflation, but September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends, 2017 could be the first time since the 1930s that more homes are let than sold.”

Here’s all the data…

City level Rental Growth for New Lets

 

12 month rental growth

Average monthly rent

Annual change in homes coming onto the market

Homes let within 24hrs

Homes with reduction in asking rent

Manchester

7.1%

£802

-4%

12%

7%

York

6.8%

£1,054

-6%

15%

9%

Leeds

6.6%

£688

-2%

10%

7%

Liverpool

5.7%

£631

9%

11%

9%

Glasgow

5.5%

£925

0%

13%

7%

Leicester

5.0%

£670

8%

10%

7%

Nottingham

4.5%

£652

8%

11%

7%

Birmingham

4.5%

£790

5%

10%

9%

Cardiff

4.3%

£601

10%

11%

6%

Sheffield

3.8%

£625

33%

10%

10%

Norwich

3.7%

£729

-3%

11%

6%

Edinburgh

3.3%

£997

14%

14%

7%

Portsmouth

3.2%

£843

11%

14%

9%

Bristol

2.5%

£1,020

26%

12%

12%

Brighton

2.0%

£1,266

16%

9%

12%

Cambridge

1.8%

£1,261

27%

14%

18%

Oxford

1.6%

£1,235

15%

7%

14%

London

1.6%

£1,313

18%

10%

17%

Newcastle

1.3%

£670

24%

9%

9%

Aberdeen

-7.6%

£763

44%

6%

13%

North South (City) Divide

 

12 month rental growth

Ave Rent Sep-16

Ave Rent Sep-15

Northern Cities*

6.4%

£ 841

£790

Southern Cities*

1.8%

£1,079

£1060

Difference

4.6%

£239

£270

Rental Prices for New Lets

Region

Ave Rent Sep-16

Ave Rent Aug-16

Ave Rent Sep-15

September Rent YOY

Greater London

£1,313

£1,299

£1,292

1.6%

Central London

£2,468

£2,434

£2,464

0.2%

East of England

£1,010

£977

£929

8.7%

South East

£1,198

£1,188

£1,175

2.0%

South West

£866

£862

£871

-0.6%

Midlands

£704

£705

£693

1.6%

North

£692

£697

£674

2.7%

Scotland

£706

£726

£700

0.9%

Wales

£696

£669

£658

5.8%

Total

£963

£957

£946

2.2%

Rental Prices for Occupied Units

Region

Ave Rent Sep-16

Ave Rent Aug-16

Ave Rent Sep-15

September Rent YOY

Greater London

£1,227

£1,225

£1,179

4.1%

Central London

£2,441

£2,404

£2,443

-0.1%

East of England

£886

£881

£839

5.6%

South East

£1,011

£1,007

£993

1.8%

South West

£752

£751

£734

2.5%

Midlands

£641

£639

£627

2.2%

North

£635

£633

£623

1.9%

Scotland

£647

£643

£638

1.4%

Wales

£656

£653

£649

1.1%

Total

£873

£869

£851

2.6%

*Northern Cities: Scotland, North West, North East and Yorkshire & Humber

*Southern Cities: London, South East, South West and East of England

Source: Countrywide

Northern Quarter, Manchester by Duncan Hull (CC-BY-2.0)