Rents have risen sharply again over 2023, but the pace of growth is set to slow in 2024.
According to Zoopla, rental growth will halve to five per cent next year.
The property portal suggested that rents have already passed their peak, with 2023 growth at 9.7 per cent compared to 11.9 per cent in 2022.
Zoopla’s latest Rental Market Report noted signs that ‘asking rents have risen too high’ in some markets. There has been a spike in rental listings with rent reductions of over five per cent. This has now happened to seven per cent of listings across the UK and 10 per cent in London.
Regional split
London recorded the greatest slowdown in rental growth over the last year, down from 17 per cent a year ago to nine per cent.
But Zoopla predicts that rental growth in the capital will slow sharply to just two per cent in 2024.
Rental growth in Scotland stands at 12.9 per cent, up from 11.4 per cent a year ago. Demand has been strong in Scotland with rent controls a factor behind the strong growth in rents for new lets. Rental growth in Edinburgh is 15.2 per cent and 13.2 per cent in Glasgow.
Northern cities including Manchester, Bolton, Derby and Newcastle also saw double-digit rental growth this year, fuelled by strong demand and greater headroom for rents to increase.
The average UK rent now stands at £1,201 per month, with the highest rents recorded in London (£2,049), Oxford (£1,611) and Brighton (£1,565).
Richard Donnell, executive director at Zoopla, said: “The UK is past peak rental growth which will be welcome news to renters who have seen rents rise by almost a third (31%) over the last three years. London will lead the slowdown, acting as a drag on the UK growth rate.
“The slowdown in rental growth over 2024 will be down to a weaker labour market, slower earnings growth and growing affordability pressures limiting the pace at which rents can rise, particularly in southern England.
“Rents have room to rise above the UK average in regional cities where affordability is less of a constraint, but this won’t be the case indefinitely.”
