The growth in rents was measured at 2.4% in August, making it the best month in the rental sector so far in 2017 and dispelling some of the gloom which had built up around the sector over the summer thanks to a London market which has been declining for months. The return to growth is a result of a slight rally in the London rental market, but the city still experienced below average growth of 2.3%.
Outside of London, rents grew a lot faster. 10 out of 11 regions outside of London recorded above average rent rises, including all of the Northern regions which have been leading the way for rental growth over the past few years. Aside from Central London, the market really is looking healthy and it is still advisable to look beyond the capital at areas like Greater Manchester, Sheffield and some commuter belt towns such as Chatham for the best deals.
After all, the slight improvement in the London market should not be allowed to hide the underlying flaws. The combination of high entry prices, low rental income and tens of thousands of people leaving every year shouldn’t obscure the inherent weaknesses.
As if on cue, new data from Rightmove has revealed that asking prices for homes in London have dropped by an average of £18,000 in a month. This fall of 3.2% is the largest so far this decade and the largest in a month at this time of year since 2003.
The fall in the London market was so large that it negatively affected the national average despite most other regions seeing healthy growth. For this reason, it is always important to remember that London heavily skews the national averages, and that investing outside of the capital city is generally a preferable option.
People are still buying despite the malaise in London, with the number of sales being agreed by estate agents up 4.8% compared to the same period last year. As Miles Shipside, a director and housing market analysis at Rightmove, commented: “There were Autumn price bounces nationally in 2014, 2015 and 2016, but the south of the country has turned this month into a bit of a damp squib, whilst some northern regions are still showing marginal signs of upwards price pressure.”
For more information on the housing market, and in particular the strong Northern regions, please get in touch with our expert Property Consultants today who will be happy to advise further.