New data from Zoopla suggests that lettings demand has now recovered across the central districts of all major cities including Birmingham, Edinburgh, Leeds and Manchester in a reversal of recent behaviour.
This is largely driven by pent up demand from office workers, students, and international residents and investors who are looking for city centre living.
The portal says this is a normalisation of rental behaviour as demand once again rises in more central zones - seen most prominently in inner London with rental growth of 11 per cent compared to the same time last year. But given the steep fall in London rents during the pandemic, this translates to an increase of just £18 per month in rent compared to March 2020.
Gráinne Gilmore, head of research at Zoopla, comments: “Rents have risen sharply in recent months, amid a backdrop of rising living costs. But it is important to point out that in terms of rental affordability, in most markets rents are still close to the 10-year average. As demand continues to outpace supply, there will be further upward pressure on rents, but affordability considerations will act as a brake on large rises.
“In addition, the January peak in rental demand will start to ease in the coming months, putting less severe pressure on supply, which will lead to more local market competition, and more modest rental increases.
“The flooding of rental demand back into city centres thanks to office workers, students and international demand returning to cities means the post-pandemic ‘recalibration’ of the rental market is well underway .”
The findings back up commercial property data released by Rightmove this week, which shows demand for office space is now some 54 per cent higher than in January 2021 and 15 per cent higher than in pre-pandemic January 2020.
The office sector started the year with the strongest growth in enquiries of any sector, as more businesses assess their office needs in the hope of moving towards a ‘new normal’.
This is not just in small towns and cities where demand is well ahead of pre-pandemic levels - demand for office space within the UK’s 10 biggest cities is now just eight per cent behind pre-pandemic levels, and up 62 per cent on January 2021.
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The London lettings market has been hot since about Aug/Sept and hasn't let up since. We've seen all our rents bounce back and 90% of our stock is achieving the highest ever rents. Properties get taken so fast, in the last 3 months we've twice run out of stock!
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