Monday, October 17, 2016
North-South rental divide narrows by 4.6%
Manchester sees highest rental growth
Oxford, Cambridge and London see largest slowdown
• Rents are rising faster in Northern cities than those in the South. Over the last 12 months the cost of a new city let in the North grew 4.6% faster than in the South. (see table 2)
• Rental growth has slowed across most cities in Southern England over 2016. The South of England failed to feature in the 10 cities with the highest rental growth. (see table 1)
• At a regional level the average rent in the North of England now stands at £692 per month compared to £1,100 in the South.
• The cost of renting (a new let) has risen by 2.2% over the last 12 months, the smallest September increase for four years. (see table 3)
Rental growth has slowed across Britain over the last year, but price growth in Northern cities has remained at a similar rate to recent months. Of the 20 largest cities, the five which have seen the cost of a new let rise the fastest, are all in Northern England or Scotland. Manchester has seen the highest growth, with the rents of new lets rising 7.1% over the last year, faster than anywhere else in the country (Great Britain) and more than three times faster than the average. York, Leeds, Liverpool and Glasgow make up the rest of the top five – all have seen the rate of rental growth pick up over the last three months. (see table 1)
Most Southern cities have seen rental growth slow over the course of 2016. Seven of the 10 cities where rents are growing most slowly are in Southern England. Oxford, Cambridge and London have seen the largest slowdown in growth and all drop at least five places from last year. In the capital, rents are rising fastest in outer London, while across central and inner London they remain broadly unchanged on last year.
Greater price sensitivity has caused rental growth to slow across the South. The proportion of landlords cutting the asking rent has doubled over the last 12 months in cities in Southern England. In September, Cambridge (18%) and London (17%) saw the largest proportion of homes with a cut in the asking rent. (see table 1)
A spike in the number of homes available to rent since April’s Stamp Duty change, has given tenants more choice, increased competition among landlords and slowed the rate of rental growth.
On a regional basis the rate of rental growth has slowed right across the country, falling from 2.8% in September 2015 to 2.2% this year (see table 3). Rents are rising more slowly than last year in eight of the 11 regions. Northern England and Wales were the exceptions. With rental growth slowing across the South, the gap between rents in Northern and Southern cities has narrowed by 4.6% (or £31 per month) over the last 12 months. (see table 2). The gap remains 26% wider than it was in 2010 however.
Commenting on the findings, Johnny Morris, Research Director at Countrywide said:
“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.”
Table 2 – North South (City) Divide
*Northern Cities: Scotland, North West, North East and Yorkshire & Humber
*Southern Cities: London, South East, South West and East of England
Table 3 – Rental Prices for New Lets
Table 4 – Rental Prices for Occupied Units
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Notes to Editors:
About Countrywide plc
Countrywide is the UK's largest integrated property services Group, including the largest estate agency and lettings network. Countrywide’s network of expertise combining national scale and local reach helps more people move than any other business in the UK and is structured around four key business units: Retail, London, B2B and Financial Services. We are proud of our strong position:
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