The Lettings Index for February from Countrywide shows that rent prices in London and the South East have stalled, causing the average rent in Great Britain to record the first annual drop since November 2010.
Nationally, rent prices fell by 0.6% over the last 12 months, taking the average rent to £921 a month – £5 less than in February 2016.
Rent Prices Stall in London and the South East, Reports Countrywide
However, rents are still £112 (14%) a month more expensive than in the previous peak of 2007.
The decline in the average national rent was driven by London and the South East, where the price of a new let dropped by 4.7% and 2.6% respectively. It has taken seven months for falls in these regions to take national rent price growth to -0%.
Apart from London and the South East, every other region continued to see rent prices rise, albeit at a slower rate than the previous month. Outside London, rents increased by 0.8% annually, but the rate of growth slowed in nine of the 11 regions in Great Britain.
The East and West Midlands were the only regions to record faster rent price growth in February than in January.
The slowdown in average rent price growth was driven by a decline in the number of tenants looking for a home, combined with higher numbers of homes available to let in London and the South East.
In Great Britain as a whole, there were 5% more tenants looking for a home than in the same time last year, while London (-3%) and the South East (-5%) both had fewer renters than last February.
There was more tenant demand in every other region of the country, with the greatest increases recorded in the East Midlands, the East of England and the North West.
The surge in the number of homes available to let following the rush to beat the Stamp Duty deadline last year is now starting to subside, reports Countrywide.
There were 10% more properties available to let in February 2017 than last year across the country, but the rate of growth has halved since January.
London, the South East, the South West and the East of England were the only regions to record double-digit growth in the number of homes available to let. This increased level of stock is likely to continue stalling growth in rent prices over the coming months, the agent believes.
The Research Director at Countrywide, Johnny Morris, comments: “Rents are growing in most of the country, but falls in London and the South East are dragging down the national growth rate. Recent falls in London and the South East are small in the context of growth in recent years. Rents are a third higher in London and the South East than in 2007.
“Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south. While rents are likely to track any increase in earnings, affordability in London and the South East remains stretched. That is likely to limit rental growth.”