While UK house prices have been on the rise, rents in the capital have fallen. But as restrictions continue to be lifted across the UK and a return to city life looks more appealing, is the tide about to change?
While the market for buying and selling properties has been frantic nationally over the last few months, the rental market across London has been somewhat different; rents have been dropping since the pandemic began and remained down YOY in Q2 2021, according to new figures released by flat-sharing site by SpareRoom.
West Central and West London saw the biggest drops in room rents across the city, both down 4% when comparing Q2 2021 with Q2 2020. This is closely followed by East Central, North and South West, all down 3% YOY. In the capital, average rents fell by 2% from £724 in Q2 2020 to £708 in Q2 2021.
The biggest drops were in Chelsea (SW3) down 15%, Earls Court/West Brompton (SW5) down 11% and Dulwich (SE21), also down 11%. Meanwhile, Balham (SW12), Winchmore Hill (N21) and Upper Edmonton (N18) saw the biggest increases, up 7%, 6% and 5%.
This negative trend in the capital continues to pull down national room rents, but when excluded from the rest of the UK, average rents across the country are actually up 1%.
However, we’re starting to see interest pick back up in the capital, with demand vs supply up 71% YOY across the city. While West Central London may have seen the biggest regional drops in rent, it also experienced the biggest increase in demand vs supply (up 191% YOY), followed by East Central (up 133%) and South-West (up 98%).
Across all UK regions, East Midlands, South West, Wales and Yorkshire & Humberside saw the biggest increase in room rents, all up 3%. In fact, the only regions outside London where rents fell were Northern Ireland (-2%) and West Midlands (-1%). Within the UK’s 50 largest towns and cities, Birmingham experienced a significant decrease in rents (-6%), followed by Middlesbrough (-3%), whilst Dundee and Peterborough saw the biggest increases, both up 9% YOY.
Looking at the demand vs supply of the UK’s 50 largest towns and cities, Brighton experienced the biggest increase, up 101% YOY, followed by Poole and Edinburgh, both increasing by 81%.
The data is the latest to be compiled as part of SpareRoom’s Quarterly Rental Index, a comprehensive overview of how the room rental market is performing across the country, based on over 400,000 room listings (sample size is the combined total across both Q2 2021 & Q2 2020).
Matt Hutchinson, SpareRoom director, comments: “Our latest data shows rents in London falling year on year yet again, a trend that began with the start of the pandemic and has persisted ever since as people looked beyond life in the capital.
"However, unlike the same quarter last year, we’re now seeing demand for London rooms rentals outpacing supply. As more and more of us are vaccinated and industries like entertainment and the arts slowly starting to re-open, we can expect more people to return to our cities. That may mean the trend in negative rents begins to flatten and perhaps even reverse over the coming months."