16 January 2013

Rental index

-  North-South divide closing -

Advertised rents have increased by £73 in the North East in the last 12 months 
Yorkshire and Humber had the highest increase in rental prices in 2012 at 12% 
Average rental prices fell by 1.5% in Scotland in Q4, 2012
Gross rental yields remain at 5% throughout Britain
Britons saw rents increase by an average of £35 per month
 
The last quarter of 2012 saw the North East of England leading the way for average advertised rental prices and reducing the disparity with the South.  Overall, average advertised rental prices stabilised at around £973 per month. However, the picture at a regional level is far more mixed. In Greater London and the surrounding regions, a seasonal decline was observed in November with some evidence of rental prices softening. To the West, the trend was one of more sustained growth. Whereas heading North East, the observation was of regions going through a step-up in advertised rental prices. 
 
Robin King, Director, Move with Us commented: “Generally, demand is increasing for higher quality rental properties and tenants who need to rent for longer periods due to more stringent mortgage requirements. Add to this falling house prices sapping homebuyer confidence and lower starting rents. In combination these factors suggest more intense upward pressure on rental prices in the North East and Yorkshire & Humber.
“Gross rental yields remained at 5% throughout Britain in 2012 with the majority of regions returning an average yield of around 4%. Returns remained stable as both house prices and rents have increased at similar rates. Overall, this suggests that buy-to-let properties were a worthwhile investment in 2012. 
“Higher property prices and strong demand for rental property meant that London continues to lead in terms of yield, with returns averaging at 6.1%. However, the lower entry costs in the North East and strong yield make it an interesting alternative region for investment.”
Regional Highlights
AVERAGE ADVERTISED RENTAL PRICES
Looking at each region over the year, three distinctive patterns emerge. A step-up in advertised rental prices characterises the high growth regions of Yorkshire and Humber (12.1%), North East (11.5%) and East Midlands (8.8%). These regions have seen rents ‘step-up’ to a new level, with strong short-term growth, followed by a period of stability. This suggests that both the demand and supply sides of these regions are pushing rents up to a new market price. These growth rates look set to level off in 2013 to a more sustainable level. 
The pattern of growth in Wales (5.4%), North West (5.2%) and South West (4.3%) would suggest it is at the longer term trend rate which should be sustained in 2013. Other regions were not experiencing the expected advertised rental price growth rates. While some rental price growth was observed, these seem to have been suppressed by an indifferent rental market in Greater London (2.5%). East Anglia (0.3%), South East (3.3%) and West Midlands (2.3%) did not keep pace with the overall trend rate. Average rental prices fell by 0.9% in Scotland during 2012, where prices remained volatile through the year.
Robin King, Director, Move with Us commented: “Most regions look set to return to the long term growth trend rate of 4.5% to 5.5% in terms of rental price inflation. This is, of course, dependant on Greater London, as it has a significant impact on the overall rate across Britain both directly and indirectly. Overall we expect to see advertised rent levels in many of the high performing regions begin to settle down.”
London
Q4 saw average advertised rental prices in London peak at around £2,295 per month at the end of October, then falling by 2.2% in November. Rental prices stabilised in December at around £2,225 per month, mirroring the seasonal trend of 2011 where prices declined in Q4 and then recovered in Q1, 2012. This leaves advertised rental price growth for the region at 2.5% for 2012.
South East
After a promising start in October and November where rental prices in the South East increased by 0.5%, prices drifted downwards in December, falling 0.6%. Whilst the overall growth in rents over 2012 was 3.3%, this was after recovering from a 4% price fall in Q1. Average rents at the end of 2012 stood at £1,101 per month, up around £40 for the year.
South West
The South West saw further increases in advertised rental prices in Q4, with prices reaching a new high of £809 per month. Average advertised rents increased by 2.7%, bringing the overall increase for 2012 to 4.3%. 2013 should see a continuation of this trend, mirroring East Anglia.
East Anglia
The end of Q3 saw a peak of £876 per month in advertised rents in East Anglia, after eight consecutive months of steady price increases. This growth in rental prices reached 3.7% in September, before falling by 1.5% in Q4. Rents bottomed at around £855 per month in early December. This fall in advertised rents places the year-end rental prices 0.3% higher than at the start of 2012.
East Midlands
Q4, 2012 saw rent growth of 6.5%, the second highest of any other region. This peaked at the end of November, with rents falling by around £5.60 per month in December. East Midlands ended 2012 with one of the fastest rates of advertised rental price growth in the UK. Rents increased by 8.8% over the year, with the majority occurring in Q3 and Q4.
West Midlands
Advertised rents in the West Midlands rose by 0.6% in Q4, ending the year at £655 per month. This is £15 above January 2012 levels. October and November saw advertised rents increase by 2% before stabilising in December. The trend rate of growth for the year was 2.3%, or around 0.2% per month. Despite these increases, the West Midlands remains one of the cheapest places to rent in Britain.
Yorkshire & Humber
Advertised rental prices in Yorkshire and Humber returned to the accelerated growth path seen in the early part of Q3. After an initial fall of 1%, rents increased by over 6%, reaching £629 per month by year-end. Though this region remains the cheapest in the country, the gap has closed with its neighbouring regions. The difference between Yorkshire and Humber and the East Midlands, for example, reduced by 80% in 2012.
North East
Average advertised rental prices in the North East out-grew all other regions throughout Q4, increasing by around 16% before a 3.7% decline in December. This year has seen average advertised rental prices in the North East reach £722 per month, from £649 in January. As with the majority of regions there was a seasonal decline in advertised rental prices in December. Q4 price inflation looks to be a triggered adjustment as the region responds to increased demand.
North West
After a 0.3% fall in November average rental prices continued their growth path in the latter part of the quarter, with rents increasing by around 2% in December. This is a stark contrast to the seasonal declines seen in many of the other regions. After a year of sustained and steady rent increases in the North West, advertised rents are priced at an average of around £634 per month going into 2013.
Wales
Advertised rental prices in Wales increased by 6.1% in Q4 before stabilising in December. Rents peaked at £682 per month before settling at £678 going into 2013. Advertised rental prices increased by an average of £34 per month in 2012, an improvement of 5.4%. With rents stabilising in December, the market appears to be settling at a new price level going into the New Year.
Scotland
Average advertised rents in Scotland have continued to fall in Q4, dropping from over £655 per month to around £640. This is the lowest-point for the region since the index started in July 2011. Average rental prices have fluctuated within this region throughout 2012. The overall result is that rents are close to their opening levels in 2012. On a more positive note, rents recovered by 0.7% in December, suggesting a promising outlook for 2013.
ENDS
For further information, please contact:
Sarah Evans Toyne/ Lianne Robinson/ Chiara Barreca, Broadgate Mainland: movewithus@broadgatemainland.com / Tel. 020 7726 6111
The copyright and all other intellectual property rights to ‘The Move with Us Residential Rental Index’ are owned by Move with Us plc. Reproduction in whole or part is not permitted unless an acknowledgement that Move with Us are the source is included. No modification is permitted without our prior written consent.-  North-South divide closing 
  • Advertised rents have increased by £73 in the North East in the last 12 months 
  • Yorkshire and Humber had the highest increase in rental prices in 2012 at 12% 
  • Average rental prices fell by 1.5% in Scotland in Q4, 2012
  • Gross rental yields remain at 5% throughout Britain
  • Britons saw rents increase by an average of £35 per month

Rental index Q4

The last quarter of 2012 saw the North East of England leading the way for average advertised rental prices and reducing the disparity with the South.  Overall, average advertised rental prices stabilised at around £973 per month. However, the picture at a regional level is far more mixed. In Greater London and the surrounding regions, a seasonal decline was observed in November with some evidence of rental prices softening. To the West, the trend was one of more sustained growth. Whereas heading North East, the observation was of regions going through a step-up in advertised rental prices. 

Rental index Q4

Robin King, Director, Move with Us commented: “Generally, demand is increasing for higher quality rental properties and tenants who need to rent for longer periods due to more stringent mortgage requirements. Add to this falling house prices sapping homebuyer confidence and lower starting rents. In combination these factors suggest more intense upward pressure on rental prices in the North East and Yorkshire & Humber.

“Gross rental yields remained at 5% throughout Britain in 2012 with the majority of regions returning an average yield of around 4%. Returns remained stable as both house prices and rents have increased at similar rates. Overall, this suggests that buy-to-let properties were a worthwhile investment in 2012.

“Higher property prices and strong demand for rental property meant that London continues to lead in terms of yield, with returns averaging at 6.1%. However, the lower entry costs in the North East and strong yield make it an interesting alternative region for investment.”

 

Regional Highlights

 

AVERAGE ADVERTISED RENTAL PRICES

Rental index Q4

Looking at each region over the year, three distinctive patterns emerge. A step-up in advertised rental prices characterises the high growth regions of Yorkshire and Humber (12.1%), North East (11.5%) and East Midlands (8.8%). These regions have seen rents ‘step-up’ to a new level, with strong short-term growth, followed by a period of stability. This suggests that both the demand and supply sides of these regions are pushing rents up to a new market price. These growth rates look set to level off in 2013 to a more sustainable level. 

The pattern of growth in Wales (5.4%), North West (5.2%) and South West (4.3%) would suggest it is at the longer term trend rate which should be sustained in 2013. Other regions were not experiencing the expected advertised rental price growth rates. While some rental price growth was observed, these seem to have been suppressed by an indifferent rental market in Greater London (2.5%). East Anglia (0.3%), South East (3.3%) and West Midlands (2.3%) did not keep pace with the overall trend rate. Average rental prices fell by 0.9% in Scotland during 2012, where prices remained volatile through the year.

Robin King, Director, Move with Us commented: “Most regions look set to return to the long term growth trend rate of 4.5% to 5.5% in terms of rental price inflation. This is, of course, dependant on Greater London, as it has a significant impact on the overall rate across Britain both directly and indirectly. Overall we expect to see advertised rent levels in many of the high performing regions begin to settle down.”

 

London

Q4 saw average advertised rental prices in London peak at around £2,295 per month at the end of October, then falling by 2.2% in November. Rental prices stabilised in December at around £2,225 per month, mirroring the seasonal trend of 2011 where prices declined in Q4 and then recovered in Q1, 2012. This leaves advertised rental price growth for the region at 2.5% for 2012.

South East

After a promising start in October and November where rental prices in the South East increased by 0.5%, prices drifted downwards in December, falling 0.6%. Whilst the overall growth in rents over 2012 was 3.3%, this was after recovering from a 4% price fall in Q1. Average rents at the end of 2012 stood at £1,101 per month, up around £40 for the year.

South West

The South West saw further increases in advertised rental prices in Q4, with prices reaching a new high of £809 per month. Average advertised rents increased by 2.7%, bringing the overall increase for 2012 to 4.3%. 2013 should see a continuation of this trend, mirroring East Anglia.

 

East Anglia

The end of Q3 saw a peak of £876 per month in advertised rents in East Anglia, after eight consecutive months of steady price increases. This growth in rental prices reached 3.7% in September, before falling by 1.5% in Q4. Rents bottomed at around £855 per month in early December. This fall in advertised rents places the year-end rental prices 0.3% higher than at the start of 2012.

 

East Midlands

Q4, 2012 saw rent growth of 6.5%, the second highest of any other region. This peaked at the end of November, with rents falling by around £5.60 per month in December. East Midlands ended 2012 with one of the fastest rates of advertised rental price growth in the UK. Rents increased by 8.8% over the year, with the majority occurring in Q3 and Q4.

 

West Midlands

Advertised rents in the West Midlands rose by 0.6% in Q4, ending the year at £655 per month. This is £15 above January 2012 levels. October and November saw advertised rents increase by 2% before stabilising in December. The trend rate of growth for the year was 2.3%, or around 0.2% per month. Despite these increases, the West Midlands remains one of the cheapest places to rent in Britain.

 

Yorkshire & Humber

Advertised rental prices in Yorkshire and Humber returned to the accelerated growth path seen in the early part of Q3. After an initial fall of 1%, rents increased by over 6%, reaching £629 per month by year-end. Though this region remains the cheapest in the country, the gap has closed with its neighbouring regions. The difference between Yorkshire and Humber and the East Midlands, for example, reduced by 80% in 2012.

 

North East

Average advertised rental prices in the North East out-grew all other regions throughout Q4, increasing by around 16% before a 3.7% decline in December. This year has seen average advertised rental prices in the North East reach £722 per month, from £649 in January. As with the majority of regions there was a seasonal decline in advertised rental prices in December. Q4 price inflation looks to be a triggered adjustment as the region responds to increased demand.

 

North West

After a 0.3% fall in November average rental prices continued their growth path in the latter part of the quarter, with rents increasing by around 2% in December. This is a stark contrast to the seasonal declines seen in many of the other regions. After a year of sustained and steady rent increases in the North West, advertised rents are priced at an average of around £634 per month going into 2013.

 

Wales

Advertised rental prices in Wales increased by 6.1% in Q4 before stabilising in December. Rents peaked at £682 per month before settling at £678 going into 2013. Advertised rental prices increased by an average of £34 per month in 2012, an improvement of 5.4%. With rents stabilising in December, the market appears to be settling at a new price level going into the New Year.

 

Scotland

Average advertised rents in Scotland have continued to fall in Q4, dropping from over £655 per month to around £640. This is the lowest-point for the region since the index started in July 2011. Average rental prices have fluctuated within this region throughout 2012. The overall result is that rents are close to their opening levels in 2012. On a more positive note, rents recovered by 0.7% in December, suggesting a promising outlook for 2013.

 

ENDS

 

For further information, please contact:

 

Sarah Evans Toyne/ Lianne Robinson/ Chiara Barreca, Broadgate Mainland: movewithus@broadgatemainland.com / Tel. 020 7726 6111

 

The copyright and all other intellectual property rights to ‘The Move with Us Residential Rental Index’ are owned by Move with Us plc. Reproduction in whole or part is not permitted unless an acknowledgement that Move with Us are the source is included. No modification is permitted without our prior written consent.

 

 

Back to index