UK rental growth is up 2% annually to £876 in Q3 2019 – the highest rate in three years and half of current earnings growth, research from Zoopla has found.
Zoopla has launched its inaugural Rental Market Report – a quarterly analysis, with a new index of private rents powered by Hometrack, which records trends in the private rented sector across 60 UK geographies.
The Q3 2019 report reveals that UK-wide rental prices falls just below the 10-year average of 2.3%.
As such the increase in private rents is failing to keep pace with growth in average weekly earnings.
But the affordability of renting has improved over the last three years, with rents rising at half the rate of average UK earnings growth (up 4% annually).
Richard Donnell, director of insight and research at Zoopla, said: “Renting is more affordable today than the 10-year average.
“This follows weak rental growth over the last three years, and an acceleration in the growth of average earnings.
“First-time buyers, 80% of whom exit the private renting sector to buy, has also moderated rental demand.
“Rental affordability varies widely across the country, reflecting the relative strength of local economies.
“High house prices increase the underlying demand for rented homes.
“Meanwhile, in markets where buying is more affordable, rental demand is limited, resulting in lower rental values.
“Whilst 46% of an average single person’s earnings will go on rent in London, the majority do not rent on their own, which improves the affordability profile.
“Two people renting a two-bed property in London will spend 24% of their earnings on rent, which increases to 28% for two people renting a three-bed home.”
This marked Zoopla’s first quarterly report on the market.