The average asking price for rental homes outside London has fallen for the first time since before the coronavirus pandemic, according to property website Rightmove.
Excluding London, the average advertised rent across Britain declined in the fourth quarter of 2024 compared to the previous quarter. The drop was modest at 0.2%, bringing the average monthly rent to £1,341. This marks the first quarterly decrease since 2019. While the drop represents a small £3 reduction in newly advertised rents, it halts a prolonged period of consistent price increases, Rightmove reported.
Despite the quarterly dip, rents are still 4.7% higher than they were a year ago. However, this is the slowest annual growth rate recorded since 2021.
In contrast, London’s rental market continues to experience rising prices. The average advertised rent in the capital reached a record £2,695 per month, marking the 13th consecutive quarterly increase. However, the growth in London rents has also slowed, with a minimal 0.1% quarterly rise, equivalent to just £1. Annually, rents in London are 2.4% higher, the smallest yearly increase since 2021.
Improving supply and demand balance
Rightmove noted that an increase in the supply of rental properties is helping to balance the market. However, demand remains high, with an average of 10 applications being submitted for each rental property. This is an improvement from peak levels but still double the pre-pandemic norm.
Regionally, the North East of England saw the most significant increase in rental property supply, while Wales experienced the smallest growth. Rightmove suggested that some demand in the rental sector might have shifted to the housing sales market, driven by slightly reduced mortgage rates and rising wages.
Additionally, agents report that many tenants are opting to stay in their current homes rather than move due to the associated costs.
Market insights from experts
Colleen Babcock, Rightmove’s property expert, commented: “A first quarterly drop in rents is the culmination of several months of improvement in the balance between supply and demand. While new tenants are still paying more than they were last year, the pace of growth is slowing. That said, the market remains competitive, with some areas seeing greater improvement in supply than others.”
Babcock added that the average rental property still receives 10 applications, reflecting a market that remains active, even if less frenetic than during the pandemic’s peak.
John Baybut, managing director at Berkeley Shaw Real Estate in Liverpool, observed: “Demand is still robust, and the market remains busier than pre-pandemic levels. Tenants are paying high rents, but with more supply now available, some are becoming more selective. Others are choosing to stay put due to the costs of moving.”
Baybut emphasized the importance for landlords to price properties accurately amid rising mortgage rates and affordability pressures. “Landlords need to work closely with experts to set the right price and avoid periods where properties sit vacant,” he said.
Alex Bloxham, partner and head of residential lettings at Bidwells, added: “These figures suggest landlords are continuing to invest in their buy-to-let portfolios. Meanwhile, tenants are more likely to stay in place due to economic uncertainty and the upfront costs of moving.”
Outlook
The recent dip in average asking rents outside London signals a potential easing in the rental market’s relentless upward trend. While affordability pressures remain a concern for both tenants and landlords, a better supply-demand balance may provide some relief as 2025 begins.