1:15 AM 7th February 2024
North West Celebrates Another Monthly Rent Decrease – But Experts Say Don’t Celebrate Yet
Experts have stressed now is not the time to celebrate, despite the housing market experiencing a hopeful start to the year. It’s been reported that UK rent prices have now dropped for a third consecutive month, with the biggest value of decreases noted since the autumn of 2020 (-1.3%). However, specialists caution not to get too optimistic, hinting that short-term gains may be wiped out by long-term struggles in the coming months.
The HomeLet Rental Index, which is released monthly and analyses archived rents to paint a general picture of the UK market, has revealed that costs in the North West have decreased by -0.6%.
Successive price drops across the nation could mean that renters are saving up to £50pcm on their costs compared to just a few months ago. However, experts say this isn’t set to last.
Although the current downward trend in rental prices will go some way towards mitigating defaults and taking pressure off the average northern renter, the wider context is that rental prices in the area are still +6.48% up since February 2023, and a shocking +17.2% since February 2022; the equivalent of £147pcm more in two years.
Professionals believe this is not concurrent with wage increases, leaving many more out of pocket now than they were in a post-Covid Britain.
Commenting on the latest data, Andy Halstead, HomeLet & Let Alliance Chief Executive Officer has mixed feelings, saying:
“Now is not the time to get carried away with these marginal improvements. On the one hand, it’s great to see rent prices continue to fall month on month, and by the biggest volume in years. But on the other hand, we also know the market and are well aware of the external factors that may impact it in the coming months.
“Though we can absolutely be positive towards these short-term gains, it’s not time to celebrate just yet. In the North West, for example, a -0.6% drop in rental prices means the average tenant is saving around £5pcm compared to December 2023. However, prices have soared by almost +6.48% since last year alone; and that equates to nearly £65pcm. So, by all means, view this month’s figures with optimism, but we need to take it with a massive pinch of salt and hope that the declines remain steady.
“Of course, marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of defaults, but the broader landscape is still incredibly challenging for all parties - with little sign of easing. In fact, following last year’s trajectory, it is entirely possible that rents could be 5% - 10% higher by this time next year.
“Unless we see some dramatic changes to the economy, 2024 looks set to bring more of the same. Landlords will have to do battle with a familiar array of struggles, including rising costs and prohibitively expensive buy-to-let mortgage rates.
“I’ll be keeping a keen eye on the Spring Budget next month, to see what kind of support will be offered to renters and landlords. There’s speculation of a 99% mortgage offer being put on the table, which could encourage more buy-to-let purchases. But will that help the rental market, or hinder it? Only time will tell.”
The full breakdown of rent increases, variances and rent-to-income ratios can be found on the HomeLet website. The HomeLet Rental Index provides the most comprehensive and up-to-date data on rental values in the UK. The trends reported within the HomeLet Rental Index are from data on actual achieved rental values for just-agreed tenancies arranged in the most recent period – providing an in-depth insight into the lettings market and what’s happening right now across the UK.
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