New analysis from Hometrack reveals that rented housing in London has soared 45% since 2007, making it the most unaffordable it’s been in ten years. Strong demand and growing unaffordability has led to high growth in rental values.

In contrast to London and other southern areas, rental growth elsewhere has been broadly flat over the past decade. The reason for this difference is that jobs growth after the financial crisis has been 2 – 3 times faster in London than other regions.

The analysis also shows that over the long run, tenants spend between 32% and 37% of earnings on rent at a national level.

 

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Rental value growth

London

Since 2007, average rental values in the capital have increased by 45%

 

National

Conversely, rental growth at a national level (excl London) has averaged at just 2.7% per annum

 

North

In the North West and North East, rents have fallen by -7% and 4%

 

 

Rental affordability 2005 – 2016

Lines show annual averages by region

 

Rents and rental growth over last decade

 2007 – Q1
 2017 – Q1
 Change over last decade

 

YoY growth in rents and average earnings

London
East and West ex London
Earnings