A property expert has shared bad news for renters as he predicts the continued lack of homes available will mean rental prices will be pushed up yet again in 2025. Lucian Cook, head of residential research at property firm Savills, daid: “High demand and low supply have been the influence behind the significant rental growth seen over the past few years.
“At a national level, this pattern looks set to continue with rents expected to rise above incomes again, especially as it is difficult to see where an increase in rental supply will come from in the next couple of years. As a result, we have forecast that rents will rise a further 4.0% in 2025 – outpacing income growth.
“But, strong rental growth has stretched the finances of those living in the rental sector, limiting the capacity for further increases in some markets. In particular, slower rental growth through 2023 has led to a slight easing of affordability pressures in London. We expect that this trend will continue in the near term with rental growth of 2.5% in London in 2025, against income growth of 2.9%.
“However, we do expect to see more affordable markets in the North, where mortgaged buyers are under less strain, to see the strongest acceleration in growth beyond 2025.”
Richard Donnell, executive director at Zoopla, said: “The unaffordability of home buying has been one factor behind a 27% increase in rents over the last three years, outpacing the growth in earnings over the same period.” He continued: “We expect rents for new lets to rise by 4% over 2025 and by 10% over the next three years – the impetus for growth will come from areas where renting is more affordable, like Rochdale, Burnley and Newcastle.
“Rental inflation will be weaker in the most expensive markets where rents have risen the most in recent years, which covers London and the major cities.”
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