Rightmove says the average number of enquiries to agents about each available property to rent is still nearly double the level in pre-pandemic 2019.
But tenants are now hitting an affordability ceiling, the portal warns.
Each available rental property receives an average of 11 enquiries, nearly double the 6 at this time in 2019. The winter is typically one of the quieter periods for the market. For context, earlier this year in the summer, agents were receiving 19 enquiries per property.
The number of available properties has improved 7% compared with this time last year, while the number of prospective tenants has dropped by 19%.
This improved supply-demand balance has contributed to a slowing in the pace of rent growth compared with last year.
Average rents outside of London are now £1,339 per calendar month, 4.5% above this time last year – that’s the slowest rate of annual rent growth since 2021 – while rents are 2% above last year in London.
Rightmove predicts that average newly advertised rents will rise by 3% both inside and outside of London by the end of 2025.
Whilst the ongoing lack of available stock indicates further rent growth next year, there are signs that tenants are hitting an affordability ceiling and would not be able to meet significant rises.
Letting agents are having to reduce the price of more rental properties, with 26% currently seeing a reduction in the advertised rental price before finding a tenant, compared with 23% last year.
In addition, wages have already failed to keep up with rent rises, stretching affordability. Average UK rents have risen 40% over the last five years, whilst earnings have risen 28%.
Tim Bannister, Rightmove’s property expert, says:“There are two competing factors influencing rental price changes right now.
“The ongoing imbalance between supply and demand is putting upwards pressure on prices. On the other hand, rent rises outpacing wage growth over the past 5 years has stretched affordability to extreme levels, and is showing in the increasing number of price reductions.
“Whilst at a top-level, we’ve seen overall improvements in the balance between supply and demand, agents tell us they are still extremely busy and having to manage high volumes of tenant enquiries.
“We’re therefore likely to see a more normal figure of around 3% growth in newly advertised rents next year.”
This article is taken from Landlord Today