Traditionally, the rental market (and most other housing sectors) slows down during the run up to Christmas. However, the latest data and analysis from Your Move has revealed that this year bucked that trend with rental prices rising compared to both November and the previous year.
The data revealed that on an annual basis, rents rose faster in the South West than any other region. Compared to the previous month, the West Midlands posted the strongest increase. Across all of England and Wales the average rent rose by 1.8% in the last year, this means the average rent across the two nations ended 2018 at £865 per calendar month (seasonally adjusted).
A year of solid growth
While the level of rent increases has slowed in the last couple of years, there was still solid growth in most regions of England and Wales during 2018, Your Move found.
On an annual basis, the strongest growth came in the South West. In this region prices rose by 4.1% to hit an average of £702. Three areas still have higher rents than the South West, although average rents dropped in two of these regions. In the East of England the average rent is now £881, which represents a 1.4% fall compared to December 2017, while in the South East prices rose – by 1.2% – to reach £897.
London remains the most expensive place to rent property in England and Wales, with rents remaining stable acros December. However, prices here dropped year-on-year, with a price fall of 0.8% leaving the average rent at £1,263.
Asking prices softened in certain areas of Prime Central London, which increased movement in the mid-range brackets. Reduced demand from families and corporate relocations looking for higher end properties brought prices down in typical family areas outside Prime Central London.
With many people concentrating on Christmas celebrations, December can often see a lull in activity in the property market. Renters are often unwilling to move in the lead up to Christmas and this can have a dampening effect on rent growth. This year, prices held steady or rose in each of the ten regions surveyed between November and December, suggesting the festive slump did not impact the overall direction of the market.
The best performance came in the West Midlands, where rent grew 0.5% month-on-month to take the average rent up to £630. Across all of England and Wales, the average rent ticked up 0.1% to reach £865. This is 1.8% up year-on-year.
End of year cheer for landlords
While landlords have continued to see their returns squeezed during 2018, the year ended on a positive note, Your Move found.
Each of the ten regions in the survey recorded the same average yields in December as they did in the previous month. Across England and Wales the average also remained the same, at 4.3%. The North West, West Midlands, Wales and the East of England all ended the year with smaller yields than they did a year previously. However, the East Midlands bucked this trend with the average returns rising from 4% to 4.2% year-on-year.
The two most northerly regions continued to have the best percentage returns for landlords. In the North East the average yield was 5% while in the North West it was 4.8%.
Festive squeeze on finances
Given financial pressures elsewhere as a result of Christmas, there was an increase in the level of tenant arrears in December.
This year 10.5% of all tenancies ended the month in arrears of some kind, Your Move found. This is much higher than the 8.1% recorded in November’s survey, but a spike in arrears is to be expected at this point in the year. Despite the rise, the proportion of tenants in arrears remains well below the both the recent and all-time high recorded by Your Move.
The all-time high of 14.6% was recorded in February 2010 while the most recent high of 13.7% was found in July 2017.
Martyn Alderton, national lettings director at Your Move said, “While the rental market tends to wind down as we reach the end of the year, there were still some positive advancements this year, with prices rising in all but two regions.
“While landlords in most areas saw their yields squeezed in 2018, there was good news as returns held firm between November and December. Tenant arrears have spiked compared to November, but this often occurs at this time of year.”