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The Rental Market is in Recession for the First Time since the Financial Crisis, Reports The DPS
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The UK rental market is in recession for the first time since the Global Financial Crisis (GFC), according to the latest report from The Deposit Protection Service (The DPS).
Its latest figures, which are from The DPS Rent Index, show that, during the second quarter (Q2) of the year, the average UK rent dropped for a second consecutive quarter for the first time since 2009, falling by £7 (0.97%), from £771 per month to £764.
On an annual basis, the average UK rent also fell for the first time since the GFC, by £10 (1.30%), from £774 a month.
The Managing Director of The DPS, Julian Foster, comments: “Following almost a year of low growth, the UK rental market is now in recession in almost every part of the country.
“On top of this, our prediction last quarter that rents would decline year-on-year in Q2 for the first time since 2009 have proven accurate.”
He continues: “There are clearly long-term issues with the sector that are having a substantial effect on growth, particularly in the capital, and it’s difficult to see this negative trend ending any time soon.”
The two consecutive quarters of rent declines follow three quarters of low rent growth – the average rent price in Q2 2018 was cheaper than it has been since Q3 2016.
Outside of London, the average rent during Q2 was £671 per month, which is £5 (0.75%) lower than Q2 2017.
The average rent was lower during Q2 2018 than it was in Q2 2017 in every UK region, except Northern Ireland, Scotland and the South West.
Yorkshire experienced the greatest percentage decline in the average rent on an annual basis, of 2.95% (£17), from £567 per month to £550.
London, on the other hand, recorded the highest value decrease between Q2 2017 and Q2 2018, at an average of £36 (2.73%), from £1,326 a month to £1,289.
During Q2, the North East was the cheapest UK region to rent a property, at an average of £527 per month. It replaces Northern Ireland.
There’s some good news for tenants, as the average UK rent dropped as a proportion of the typical UK wage in Q2, from 32.56% to 32.13%.
The average rent fell for every type of property between Q2 2017 and Q2 2018, with terraced houses experiencing the greatest decline, of 2.98% (£21.78).
