Asking rents dipped by 0.6% in the final quarter of last year but remained up 2.7% on an annual basis
The average asking rent in London reached a record-high at the end of 2018, surpassing the capital’s previous peak in Q1 2016.
In the final quarter of the year, asking rents for all property types increased by 2.1% in London, lifting the capital’s annual rate of growth from 3.7% to a final level of 5.3% for 2018, according to the latest Rental Trends Tracker Index by Rightmove.
The reason behind the surge was a 22% fall in available rental properties in London between 2017 and 2018, following an influx of rental stock between 2016 and 2017 which kept rental growth muted or negative.
Excluding London, average asking rents slipped by 0.6% in Q4 2018 across Great Britain, but remained 2.7% higher compared with Q4 2017, with property supply outside the capital declining by 10%.
Analysis of the figures reveals an East-West divide emerging in the final quarter of the year, with asking rents falling in the North West, West Midlands, and the South West by 2.5%, 0.3%, and 0.4% respectively, although annual rental growth in these regions remains close to or above the national average.
The largest quarterly increase in rents was the North East, which saw asking rents jump by 5.5%.
Quarter-on-quarter growth was also recorded in Yorkshire & the Humber (1.4%) and the East Midlands (0.3%), both of which had the highest annual rates for England, excluding London, of 3.6% and 4.0% respectively.
Looking ahead to 2019, Miles Shipside, Rightmove’s Commercial Director, said:
“We forecast that average asking rents will continue to slowly strengthen further in 2019, by perhaps 3% outside London. In the capital there are no signs of an increase in buy-to-let activity, which may lead to asking rents growing further by around 4%.”
According to research by Commercial Trust Limited, buy-to-let purchases declined by 5.8% during 2018 in London, compared to a 4.7% increase in the North West.