After a few years of high rental growth being the norm, rental growth rates on achieved new market lets are slowing. This slowdown in happening more quickly in some markets than others.
Affordability remains critical and limits potential future growth where stretched. For instance, in London, affordability now sits just above 32% and rental growth has slowed to 1.7% from 9.0% this time last year.
Other indicators which help gauge how the market is changing are those which give insight on demand and supply levels: RICS data on these shows more normalised levels than evident over the last few years, particularly for demand.
As such rental growth is forecast to revert to more typical levels, with average annual growth of 3.4% expected over the next 5 years.
With less pressure in the market, there might well be higher rental turnover: with such tight market conditions over the last few years many renters opted to sit tight renew rather than move. Source: Dataloft by PriceHubble, RICS, Consensus Forecast across agents at at February 2025
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