While rental prices have returned to their pre-pandemic high in London, the unprecedented and continuing rise in the rest of the country is surprising and difficult to explain.
Data released by MIAC Property Analytics reveals rent prices in London fell by 5% during the pandemic to an average of £1,835 pcm, as city dwellers migrated out of the capital. However, London values have now recovered, with the average rent price currently standing at £1,922 pcm compared to £1,921 pcm pre-pandemic.
By contrast, rents outside of London have unexpectedly not levelled off at pre-pandemic values, instead continuing to rise sharply. Rents are currently the highest they have been since MIAC’s Index data series began in 2012, with the steep upward curve still showing no signs of levelling.
As a result, average rents for the UK, excluding London, currently stand at £1,301 pcm, up from £1,252 pcm a year ago.
A rented property in Blaenau Gwent county, South Wales, would now cost an average of £481 pcm, up from £426 pcm 12 months ago, recording a 13% increase. Similarly, a rented property in Rutland, East Midlands, would currently cost 10% more than it did last year, now standing at £724 pcm, up from £658 pcm 12 months ago.
Darrel Welch, MIAC Analytics managing director, comments: “What these figures capture is a significant disconnect between the migration of people back into London and the trajectory of rental prices outside of the capital.
“It’s difficult to pin down the exact reasons behind this anomaly but one of the contributing factors may be the larger than usual influx of first-time renters into the market. Covid caused many young people to stay in the family home longer, which could be contributing a higher pressure on supply as a larger annual cohort than usual are now trying to rent a house.
“Another theory could be that the London market is faster-moving, more reactive and open to shorter leases than in the regions.
“Of course, the economic analysis and explanation of such unexpected trends is unlikely to be simple – we look forward to discussing this with industry commentators and hearing their theories and predictions.”