The north-south rent price divide across Great Britain has narrowed by 4.6% over the last 12 months, according to the latest Monthly Lettings Index from Countrywide.
The research shows that rental growth has slowed across the country over the past year, but price growth in northern cities has remained at a similar rate to recent months.
Of the 20 largest cities in the country, the five with the fastest growth in new rent prices were in northern England or Scotland.
Manchester recorded the greatest growth in September, with rents rising by 7.1% for new lets over the past 12 months – faster than anywhere else in the country and more than three times faster than the average.
York, Leeds, Liverpool and Glasgow make up the top five, with all seeing the rate of rental growth pick up over the past three months.
North-South Rent Price Divide Narrows by 4.6%
Most southern cities have seen rental growth slow over the year so far. Seven of the ten cities where rents are rising most slowly are in southern England. Oxford, Cambridge and London recorded the largest slowdown in growth, and all drop at least five places from last year.
In the capital, rents are rising fastest in outer London, while across central and inner London, they remain fairly unchanged on last year.
Greater price sensitivity has caused rental growth to slow across the south. The proportion of landlords cutting the asking rent has doubled over the past 12 months in cities in southern England. In September, Cambridge (18%) and London (17%) recorded the greatest proportion of homes with a cut in the asking rent.
Countrywide reports that a spike in the number of homes available to rent since April’s Stamp Duty change has given tenants more choice, increased competition among landlords and slowed the pace of rental growth.
Regionally, the rate of rent price growth has slowed right across the country, falling from 2.8% in September 2015 to 2.2% this year.
Rents are rising more slowly than last year in eight of the 11 regions – northern England and Wales were the only exceptions. With rental growth slowing across the south, the gap between rents in northern and southern cities has narrowed by 4.6% (or £31 per month) over the last 12 months. However, the gap remains 26% wider than it was in 2010.
The Research Director at Countrywide, Johnny Morris, comments on the findings: “A different type of two-speed rental market is emerging, with falling stock and growing demand driving rental growth in many northern cities at a higher rate than those in the south.
“With London rents growing at the slowest rate since the downturn (2008) and northern cities recorded rent rises three times as large as their southern counterparts, there are signs that the north-south rental divide is starting to close. Although at current rates it would take at least five years for the gap between rents in the south and north to close back to 2010 levels.”
He concludes: “As some would-be buyers and sellers sit on their hands, Brexit-induced uncertainty has continued to boost the rental market. Overall, this is yet to stoke rental inflation, but September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends, 2017 could be the first time since the 1930s that more homes are let than sold.”