Despite a month of relative stability, the dynamics of the property rental markets has seen some remarkable shifts, particularly in London and the South East of England where rental costs reached all-time highs in September 2023. At the same time, despite the overall steadiness, a drop in average salaries of tenants has been observed.
Stabilised Rental Prices Amidst Sky-High Demand
According to the latest data from the Goodlord Rental Index, the rental prices and rent voids – that is the periods when property stays vacant – remained steady in September 2023. Thanks to the robust demand, the average rent across England has surged by almost 8% compared to the prices seen in September 2022.
Whether it’s down to students returning for a new academic year, or professionals changing their housing due to job relocations, September saw a great demand for rental properties in England, making the pressure on rental markets possibly the most intense it’s ever been.
Notable Surges in London and the South East
In the midst of stability in the rental market, a major shift was noticeable in Greater London and the South East. Both regions broke their previous records of average rental costs.
The average rent for a property in London rose to £2,275, surpassing the £2,200 barrier for the first time. This represents a 6% increase from August’s £2,145. The South East also saw a milestone, with the average rental cost breaking the £1,500 threshold, now standing at £1,524, a 2% climb from August’s figure.
Sight of Decrease in Select Regions
Interestingly, while London and the South East saw record-breaking hikes, other parts of England experienced slight reductions in rental costs. For example, renters in the East Midlands, North East, and South West saw a decrease in their average rental costs.
This points towards the diversity of the property rental market where different trends can be observed simultaneously in different regions, underlining the importance of regional insights for potential property investors.
Voids – Minor Fluctuations Observed
The rental price stability wasn’t the only highlight of the month – voids also remained steady. According to the data, void periods across England only stretched by a single day on average – from 13 to 14 days in September.
However, Greater London defied this trend, exhibiting a decrease in void periods. Along with the major hike in rental costs, the city saw a decrease in voids of 9%, dropping from 11 days in August to just 10 days in September. This suggests that properties in London were vacant for lesser time periods before finding new tenants.
The North East region continued to have the shortest void periods, staying put at an average of 9 days for the third month in a row. On the other hand, the West Midlands saw the longest void periods, also for the third consecutive month, averaging 22 days.
Tenants’ Average Salaries, a Slight Dip
Despite the significant demand and competitive rental prices, the average salary of tenants who moved in September 2023 dipped by 4.5%, from £37,037 in August to £35,386. This drop might have implications for both landlords and tenants across the rental market.
Industry Outlook – Room for Unpredictability?
William Reeve, CEO of Goodlord, shared some perspectives on these trends. He remarked that despite September not experiencing a nationwide surge in rental costs like last year, London and the South East shattered their previous records.
As autumn sets in, the market tends to stabilise. However, given the current market intensity, Reeve isn’t confident that the trends seen in September signal a lasting end to the rental price cycle observed in recent months.
The behaviour of the rental market in the coming months will indeed be interesting to keep an eye on, providing potential property investors with vital insights into where and when they might wish to invest next.