The impact of rental prices on city living

The bright lights and big city life have long been an attraction for homeowners and renters alike. Although, this allure did lessen in the early parts of the pandemic as people demanded more space – both internal and external – and many looked to more rural regions.

Urban living enjoyed a resurgence as the pandemic waned, but the old faithful economic cornerstones of supply and demand appear to be bucking this trend once again.

According to recent data from Rightmove, low levels of suitable property, soaring rents, and wider financial pressure caused by increased living costs are fuelling an exodus of renters from cities across Great Britain.

Market analysis covering ten major cities found that a growing proportion of renters are fleeing city life to find a cheaper place to live or to get more for their money. 42% of renters are now looking to move out of the city they currently live in while the remaining 58% are looking to stay in the city. This is an increase on the 37% who were looking to leave last year and up from 28% in pre-pandemic February 2020, with the capital seeing the biggest increase in proportion, followed by Sheffield and Manchester.

Rents rising at a record pace over the past few years and a decline in the number of available properties for renters to move into are likely reasons that a greater proportion of renters are looking outside of the city to secure a home. Average asking rents across Great Britain are reported to be up 11% compared with this time last year, and up 12% across ten major city centres on average.

Edinburgh city centre saw the largest increase in average asking rents compared with last year (+19%), followed by Inner London (+18%) and Manchester city centre (+14%). Another contributing factor to leaving a city is that demand from renters to secure each available rental property has rapidly increased. Competition to secure a home to rent in a city centre has more than doubled compared with three years ago (+125%).

While urban living will always appeal to certain people, it’s interesting to see how a variety of tenants are reacting to rental prices, how much they are willing to pay and where, plus what they want from their homes going forward. And these are ever-changing factors which any good landlord will need to consider for new portfolio additions and in managing their current property investments.