Rental affordability ‘improving as more people make jump on to property ladder’
The cost of renting has become more affordable as a jump in people getting on the property ladder has helped to take some of the pressure off demand in the sector, an index suggests.
Zoopla, which has launched a new quarterly rental report, said average private rents are up 2% annually to £876 per month on average across the UK.
It said a typical single earner can now expect to spend 31.8% of their wages on rent, down from a 2016 peak of 33.3%.
The figures are based on gross earnings and someone renting a whole property – so someone sharing with others could potentially cut their costs.
Separate mortgage lending figures released by UK Finance this week showed there were more first-time buyers in August than in any other month since 2007.
Housing market experts have suggested that stamp duty relief for first-time buyers, low mortgage rates, and a sense of urgency fuelled by Brexit are among the factors driving people to make the move into home-ownership.
Zoopla said the affordability of renting has improved as wage growth has been increasing faster than rental prices.
Richard Donnell, director of research at Zoopla, said: “Renting is more affordable today than the 10-year average.
“This follows weak rental growth over the last three years, and an acceleration in the growth of average earnings.
“First-time buyers, 80% of whom exit the private renting sector to buy, has also moderated rental demand.
“Rental affordability varies widely across the country, reflecting the relative strength of local economies.
“High house prices increase the underlying demand for rented homes.
“Meanwhile, in markets where buying is more affordable, rental demand is limited, resulting in lower rental values.”
Across the UK, homes take 17 days to rent on average – down from 19 days a year ago.
But in some cities, the average home rents out much faster than this – including Brighton (13 days), Nottingham (12 days), Edinburgh (11.3 days), York (10 days), and Bristol (9 days).
Here are average monthly rental prices followed by the year-on-year increase and the affordability for a single earner, showing how much of their money would typically go on rent, according to Zoopla:
– England, £900, 2.0%, 32.1%
– Scotland, £625, 2.9%, 24.2%
– Wales, £592, 1.9%, 24.5%
– Northern Ireland, £587, 1.8%, 24.9%
– East Midlands, £638, 3.2%, 25.8%
– Yorkshire and the Humber, £578, 2.8%, 23.3%
– South West, £787, 2.6%, 30.8%
– London, £1,622, 2.3%, 45.9%
– North West, £599, 1.8%, 24.2%
– Eastern, £876, 1.6%, 30.2%
– South East, £1,007, 1.4%, 32.9%
– West Midlands, £660, 0.8%, 26.6%
– North East, £503, 0.5%, 22.3%