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London Property Market 16 March 2016

Chestertons Residential Observer - March 2016

  • In the three months to January, average UK rents, at £740pcm excluding London, were 5.5% higher than in the corresponding period a year earlier, according to the Homelet Index.
  • Over the same period average rental growth in London slowed to 6.4% from 8% in the preceding three-month period.
  • Average monthly rents in the capital are now £1,263.
  • Research3 suggests renters in London paid a total of £89,269 over the past five years for the average two bedroom home in the capital. That equates to almost the 20% deposit required by most mortgage providers to secure a typical London home.
  • Official data show Londoners are now spending nearly two-thirds of average income on rent. Private-sector rents have rocketed up from 49% of average pre-tax income to 62% since 2010.
  • Six years ago, tenants spent more than half their income on keeping a roof over their heads in only five London boroughs. That figure has now increased to 20 out of 32 boroughs in the capital.

Generation Rent facing looming affordability crisis "Can't afford to buy, can't afford to rent" may soon become the common refrain of many working people in London, as rental growth also continues to outstrip average earnings growth to the tune, currently, of over three times. The one ray of hope for the future is the small but growing number of developments that are offering apartments for rent off-plan rather than for sale. However, in relation to the scale of London's overall undersupply situation, they are but a drop in the ocean.