We are pleased to share with you the latest edition of our quarterly residential insights for the UK, providing insight for investors, developers, and the wider build environment.
- Rental growth is slowing following the significant growth experienced in the post-Covid rental boom, with UK rents (excluding London) up 5.9% year-on-year to September 2024, down from 9.3% last year, while London rents rose only 1%, down from 12%.
- The gap between rent and mortgage costs has widened and renting is more affordable than buying for the first time, with UK renters spending an average of 32.6% of income on rent versus 36.4% on mortgage payments.
- The supply-demand imbalance has narrowed but remains, with rental demand down 35% year-on-year, and available homes up 13%, though supply is still 27% below pre-pandemic levels. Changes in policy and taxation have led to a notable trend of private buy-to-let landlords exiting the market.
- New home construction has dropped by 20% from last year owing to the tough economic climate and softer demand from buyers, however, as viability improves with lower borrowing costs and construction costs, this is expected to boost BTR supply.
- Despite muted Q3 investment activity, year-to-date volumes reached £2.9bn, surpassing last year. With a more positive economic outlook, strong fundamentals, and government support for housebuilding, we expect investor appetite to remain strong and ready to deploy funds in the sector.
