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Where are rents rising the most?

Friday 22nd February 2013

Most regions saw rent increases in January, but the best performing UK region, with rents increasing by 1.31% month-on-month, was the North West of England.

Seven of the eleven regions examined by Move with Us experienced minor rental price increases throughout January, with only the North West registering more than 1%. The trend line for regions such as the East and West Midlands, Wales and the South East, suggests a period of stability and small fluctuations around a constant price level. In addition, the trend for the North and South West suggests continued rental price growth keeping pace with retail price inflation.

Though East Anglia and Scotland both saw rents recover from a seasonal fall in advertised rents in December, it is yet to be seen how prices will behave in the long term. Prices fell slightly in Yorkshire & Humber, marking an end to the 6% increase registered in late 2012. A similar situation occurred in Q3 and Q4 last year, with rent increases temporarily tailing off before recovering.

Despite rent rises across most regions, rental asking prices across Great Britain actually fell in January. This can be largely attributed to the 1.07% decrease in average rents in London. The average advertised rent in the UK currently stands at £972, which is still £35 more than January 2012.

February should see similar rental market conditions to January. Market growth of above 0.5% should occur in most regions, with rental prices increasing at around the rate of inflation. London rents are likely to fall at a slower rate than January as rental prices begin to recover, whilst advertised rents in Yorkshire & Humber should stabilise and return to growth. In addition, Scotland may see the first two months of consecutive growth since Q1 of 2012.

Robin King, director of Move with Us, commented: “Rental asking prices have remained stable throughout January, and indicators suggest that they will remain fairly stable into the next quarter. Minimal evidence of demand pressures, combined with stable supply, suggest that the market has reached an equilibrium point.

"The supply of advertised properties remains at around 180,000, as landlords appear more interested in maximising occupancy and avoiding arrears than increasing rents. On the demand side, there has been little movement in average wages, while increases in home loan availability are allowing more people to enter residential markets. A result of this is house price inflation, which combined with on-going rent stability will start to erode rental yields. However, landlords are compensated by capital yield improvements.”

              

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