Rental prices have risen by 11% between the start of the pandemic and today, a new rental index report by Rightmove has found.
It brings the average cost of a rental in the UK to £1,041 per calendar month – compared to £940 in February 2020. In rural areas, which became far more sought-after during the pandemic for the additional space and distancing, the cost has risen by £123. In the less popular urban areas it’s gone up by far less at just £25 per month.
Demand for rural rentals well outstrips supply
The statistics also show there were 45% less rentals available in the suburbs and 61% fewer in rural areas since the start of the pandemic. In fact, 64% of all rental properties available were for urban areas (that was nearly half – 48% more – than pre-pandemic. Those available in the suburbs dropped 13% to 33%, while in rural areas the drop was from 6% to 3%.
The property portal based its analysis on more than 300,000 rental listings and stock for the period February 2020 and August 2021.
No ‘real change’ until next year say analysts
Analysts believe that with more people returning to work – at least in a hybrid fashion – that urban rental demand will increase again. But they say this isn’t going to happen overnight and, in fact, there may not be any major changes until next year.
A new report by Savills says they’re already noticed an upturn in city centre living, with Manchester and Birmingham, in particular, witnessing travel that is almost back to pre-pandemic levels. London, however, remains slow to change, with just 66% of travel returning (compared to figures in the high 80s and 90s for the two more northern cities.
A spokesman said “the office isn’t going to go away” and added: “Residents will still value additional space, but it is likely that they will also desire to be within reasonable commuting distance of city centres for the days they choose to work there.”
Mortgage rates for first time buyers falling
Meanwhile, buy to let landlords and first-time buyers, or those looking to remortgage will be interested to learn that mortgage interest rates are still falling. The rate for new mortgages in August, for instance, was 1.82% (a drop of 1 basis point since before the pandemic). For everyone else the rate remains at 2.05% and which, in itself, is a record low.
The low mortgage interest rate has helped propel the property market this year, despite soaring property costs. Mortgage approvals are still higher than before the pandemic, with lenders giving the go-ahead to 74,500 mortgages in August.
House prices up 8% over year
The average house may have fallen by £10,000 between June and July, figures for the Office for National Statistics show, but values have risen by 8% over the past year.
Upmarket estate agents Hamptons predict a ‘second wave of demand’ for house sales where house prices will increase to around 3.5% a year between 2022 and 2024.