In my last article I got a little sucked in to Monopoly and the London rental market. I also touched on changing tenant attitudes and needs, and the lingering question of how strong the urban-living pull will be compared to a growing need for more space inside and outside our homes.
This continues to be one of the most noteworthy effects of the pandemic, and we are still evaluating its impact in the short term with a view to any lingering effects over the longer term.
‘Urban versus rural’ desires are likely to be tested further as a greater number of people return to office life for larger chunks of the working week
This shift in the distribution of available properties between urban and suburban areas was the subject of research by Rightmove. The research — released in early October — suggested that the average asking rent in suburban areas across Great Britain was £1,041 per calendar month, up from £940 in February 2020. In rural areas, rents have jumped from £1,141 per calendar month to a current level of £1,264. Urban rents are up by just £25 over the same period, from £1,347 to £1,372.
More competition
Rightmove said a sustained desire from renters for more space outside cities had led to increased demand for suburban properties, contributing to the number of available homes to rent in the suburbs dropping by 45% compared to before the pandemic, and those in rural areas by 61%.
It will be interesting to monitor the lasting impact of the pandemic
This means more competition among tenants, with demand per rental property available in the suburbs rising by 155% compared to pre-pandemic levels and soaring 224% in rural locations.
Of all the available rental properties on Rightmove, 64% were in urban locations, a jump from 48% pre-pandemic. The proportion of available properties in the suburbs dropped from 46% to 33%, while those in rural areas declined from 6% to 3%.
Further analysis of 23 major UK cities from estate and lettings agent Barrows and Forrester found rental demand had risen 9.9% in the third quarter (Q3) of 2021 across these cities, compared to Q2. Demand averaged 42.9% during Q3 — 6.8% higher than in Q3 2020.
Demand per rental property available in the suburbs rose by 155% compared to pre-pandemic levels and soared 224% in rural locations
Breaking this down, Cardiff and Glasgow saw the largest quarterly uplift, with rental demand climbing by 22.1% in both cities. Bristol (21.9%) and Edinburgh (21.5%) also saw tenant demand lift by more than 20% in Q3, with Cambridge completing the top five (19.6%).
Other cities in the top 10 included Manchester (14.8%), Newcastle (11.2%), Southampton (10.9%), Plymouth (10.8%) and Birmingham (10.5%). Newport was the only city to see a decline in demand in Q3, down 5.2% on the previous quarter. Five cities saw demand in Q3 drop below the levels seen this time last year: Belfast (40.9%); Nottingham (3.5%); Portsmouth (3.3%); Liverpool (2.9%); and Plymouth (0.4%).
A sustained desire from renters for more space outside cities had led to increased demand for suburban properties
It will be interesting to monitor the lasting impact of the pandemic on individual markets across the economy, and none more so than rental demand. ‘Urban versus rural’ desires are likely to be tested further as a greater number of people return to office life for larger chunks of the working week and the volume of commuter traffic rises.
So watch this space to see how this trend continues to develop within major towns and cities across the UK.
Cat Armstrong is mortgage club director at Dynamo for Intermediaries
