Zoopla’s latest insights have painted a vivid picture of what we can expect in the vibrant world of London rentals for the upcoming year. Megan Eighteen, Operations Director for Location Location and Vice President for ARLA Propertymark, shares her thoughts on the forecast for 2024.
Megan explained “London’s rental market is anticipated to experience a moderate but steady rise in 2024, reflecting the evolving landscape of housing demand and supply dynamics. Zoopla has foreseen a potential easing in the relentless rise of London’s rent prices for the upcoming year.”
The property portal’s forecast anticipates a modest increase of merely 2% in 2024, a notable slowdown compared to the 9% surge in rents on average observed since October 2022. The preceding year had seen an astonishing 17.1% hike, marking a troubling escalation in the rental crisis.
Remarkably, properties entering London’s market find new tenants within a mere 13 days, as reported by the property portal.
Zoopla’s analysis reveals indications that the exceedingly high rental demands have surpassed affordability thresholds. Presently, average rental prices in London stand at £2,125 per month, reaching a staggering total of £32.1 billion spent by Londoners on rent this year, according to Hamptons’ latest rent report. Affordability remains a significant concern, with Londoners allocating 40.2% of their income toward rent, significantly higher than the UK average of 28.4%.
Interestingly, despite London’s reputation for high rents, Scotland witnessed the most significant rent rises in 2023, with Edinburgh and Glasgow experiencing increases of 15.2% and 13.2%, respectively. In England, cities such as Manchester, Cardiff, Newcastle, Nottingham, Southampton, Birmingham, and Liverpool saw steeper increases compared to London.
Zoopla attributes the soaring rents to a persistent imbalance between the supply and demand for rental properties over the past few years. This surge in demand stems from various factors, including the return to urban workspaces post-pandemic, an influx of overseas university students into the rental market, and individuals forced to rent longer due to mortgage rate hikes.
However, Zoopla noticed a 20% year-on-year decline in demand for rental properties in London, possibly due to economic growth concerns, increasing rents and more favourable mortgage offers enticing first-time buyers to venture into the property market.
The property portal’s prediction of a 2% rent rise in London for 2024 appears more conservative compared to Savills’ forecast, which estimates potential increases of up to 5% next year.
Megan adds “2024 will be an interesting year for the private renter sector, we have alongside the ongoing legislative pressures, rents at an all-time high, the renters’ reform bill pending and a looming general election. We are excited to see how things develop over the next 12 months”.
