Average rents up 2pc in 2013
Areas where demand is increasing more quickly than supply, predominantly outside the South East, rental growth is beginning to reflect this.
While Greater London saw an increase in average monthly rents of 3.4% over 2013, rents in Central London decreased 0.2%, reflecting significant increases during 2012 partly due to the Olympics effect.
The picture is similar in the South East where average monthly rents fell 0.5%. However, areas outside London and the South East have seen higher rental growth after sub inflation increases in 2012.
Across Northern England average monthly rents rose 3.0%, a rate which Countrywide expects to continue in the first part of 2014.
While changes in rents are a product of supply and demand, they are a reflection of what people can afford to pay. In 2013 rents and wages increasingly aligned.
The strongest wage growth and the largest increases in rents have been in the Northern Regions of England, in Scotland and Wales.
Rents have closely reflected the growth in earnings, with the exception of London, where wage growth has been more subdued.
Demand for rental properties has risen more quickly than supply across areas in the North of England and Wales
Some 2013 saw a rebalance of supply and demand in many rental markets across the country with the number of would be tenants growing 6% more quickly than the number of available rental properties.
However, new demand has been increasingly focussed in much of the North and Wales, whilst pressure on rental markets across the South East has eased slightly.
The South East saw new demand for property matched more closely by the number of new rental properties coming onto the market.
Across the South East as a whole, the number of new properties available to rent increased 4% more quickly than the number of tenants looking for property.
The impact of this has been a 0.5% fall in average monthly rents in 2013. While tenants in London and the South East still face the most competition for rental property, there are signs that this is starting to change.
Areas outside Central London and the South East have seen demand grow more quickly than supply throughout 2013.
Inside the Capital, East London has proved to be the exception to the rule with demand rising a third more quickly than new supply in2013. In 2012, Countrywide saw an average of 6.5 tenants competing for each rental property in East London compared to 8.0 in 2013.
This compares to an increase in the number of tenants competing for each property across London as a whole rising from 5.1 to 5.4 in 2013.
The North East, South Yorkshire and Wales all saw substantial increases in tenant demand which has not been matched by an equivalent increase in the number of rental properties.
With the rate of employment creation growing outside the capital, the rental market is playing an important role in accommodating workers moving to new jobs.
Between 2012 and 2013 the number of jobs in Cambridgeshire grew 6.6%alongside a level of population growth above the UK average.
The result has been that the number of tenants looking for a rental property has increased 42% more quickly than the number of advertised rental properties.
Nick Dunning, group commercial director, Countrywide, said: “2013 saw the focus of demand shift sharply northwards after several years of more stable levels of supply and demand. Increased competition among tenants for properties has intensified which has resulted in rental growth running at twice the level of 2012.
“The largest increases in demand have been in those towns and cities where the most new jobs have been created as the recovery spreads outwards from London. As the economic recovery takes hold across the North, we expect wage growth and rents to track inflation more closely in this region.
The large increases in rents seen in the Capital and the South East in 2012 were not been mirrored in 2013. While rents in London continue to increase, the rate of increase has reduced substantially and is closer to the average increases seen across the rest of the country.
“In 2013, the North and Midlands regions have increasingly been playing catch up with London and the South East where rents increased at twice the rate of the rest of the UK in 2012.