A leading market forecaster has described the level of rent rises in one part of the country as “going ballistic”.
“The London lettings market has undergone a dramatic transformation over the last year as the Covid exodus has reversed” explains Doug Shepherd, director of the website Home, and author of its respected monthly lettings and sales market snapshot.
His latest report, just out, continues: “The capital’s rental market now offers 63 per cent fewer properties available to let compared to a year ago and central London rents are seemingly going berserk. Asking rents in the borough of Kensington and Chelsea, for example, have risen just over 50 per cent in the last twelve months.”
And the report adds: “Surging rents (and yields) in central London, coupled with ‘free money’ for borrowers, has triggered greater demand in the London sales market. Our forecast for 2022 is that prices and rents will continue to rise overall due to scarcity caused by the current easy money policies.
“Only a significant rise in interest rates could trigger a loosening of sales supply but any such move would be catastrophic given the indebtedness of government and the private sector alike.”
Home says that in addition to Kensington and Chelsea, the greatest rises in asking rents over the last 12 months are London are in the City (where asking rents have soared an amazing 107 per cent) and in Tower Hamlets, where rents are up a huge 46.3 per cent.
Supply of rental properties is diminishing in all English regions, Scotland and Wales, down a combined 36 per cent since December 2020.
Meanwhile rents are up an annualised 5.8 per cent across the UK.
However, rents are correcting in several regions following the reversal of the Covid-related London exodus although, due to scarcity, so this nationwide rise is likely to be transitory.
The largest annualised average rent hikes outside of London are in the East of England and the South East, up 7.1 and 5.0 per cent respectively.