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UK rents expected to rise by an average of 11.4% over the next five years Image

15th January 2019
UK rents expected to rise by an average of 11.4% over the next five years

UK rents are expected to rise by an average of 11.4% over the next five years, according to a prediction by CBRE.

Alongside fairly moderate growth of 1.8% in the average UK house price this year, the property group expects rents to rise by 1.3% during 2019.

The report, which looks at how economic, political, financial and technological trends could affect the property market, foresees further growth in rents leading up to 2024, supported by a drop in housing supply in the private rental sector, amid “dampened investor demand for buy-to-let”, and growing demand for rental homes, particularly from lower-earning young people.

CBRE estimates that UK rents will rise by 1.3% in 2019, followed by growth of 1.9% in 2020, 2.5% in 2021, 2.7% in 2022, and a further 2.6% in 2023. This equates to total growth of 11.4% during the whole period.

House prices, on the other hand, are expected to increase by 1.8% this year, followed by growth of 2.3%, 3.4%, 3.7%, and 1.3%, equating to 13.1%.

Miles Gibson, the Head of UK Research at CBRE, says: “We expect rather weak house price and rental growth over the next year, but we think that the lack of supply and low interest rates for mortgages will hold prices up.”

He adds that weak supply and strong demand is “creating a lot of interest among investors” in the student accommodation and build to rent sectors, especially in terms of institutional capital.

Some £2.1 billion of institutional funds have been invested in the year to the third quarter (Q3) of 2018, which is 51% higher than in the same period of 2017.

Investment is on a firm upwards trajectory, with volumes in 2019 likely to exceed 2018’s total, according to CBRE.

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