It doesn’t seem to make sense, but if inflation is taken into account, renters appear to be better off than they were last year. But of course, there’s more to the picture than meets the eye…
Recent research by the specialist property rental company Ocasa suggests that, taking inflation into account, renters are better off today than they were a year ago.
Despite nominal rent increases of up to 14%, the latest data shows that the average price of rent in the UK is currently £1,143 per month, 21.7% higher than 2017’s average of £939, and 8.5% higher than this time last year when the average price was £1,053.
But this increase is below the rate of inflation, so despite the increasing cost of rent, when prices are adjusted for inflation, it’s suggested that renters are actually better off today than they were last year.
After adjusting for inflation, the average rent in the UK this time last year was £1,162. This is -1.7% cheaper than today’s average of £1,143, suggesting that, in real terms, tenants are actually paying a lower level today than last year due to the fact that the cost of renting, while certainly escalating, has not kept pace with inflation.
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Regions
Regionally, though, some rent hikes have been higher, for instance in Scotland where the nominal price of rent is now 13.6% more expensive than it was last year and almost 40% higher than it was five years ago.
In Northern Ireland, the annual rent increase is 12.9%. In London it’s up 10.8% while in the North West and South East, there have been annual increases of 9.9% and 8.1% respectively.
In these areas, charities fear there could be a spike in homelessness as people simply can’t afford rising rents. According to housing charity Shelter, the number of renters evicted by bailiffs has gone up by 39% across in the last three months, and the number of eviction proceedings is back at levels pre-pandemic, before the temporary pause on evictions that was put in place when coronavirus was at its height.
Renters are benefiting the most in the North East where the real cost of rent is -5.8% lower this year compared to last. In the East Midlands, tenants are paying -3.7% less and in the South West, they’re -3.4% better off.
See also: Is Inflation Blocking Property Prices?
Of course, it’s inaccurate to suggest that renters anywhere are doing well, because although rental costs may not have kept pace with inflation, every other aspect of the cost of living, from food to energy, has gone up, leaving the cost of renting no more manageable now than it was a year ago.
Renters in London, Scotland, and Northern Ireland will feel the cost of living crisis particularly, because their rent payments have grown so high that they are paying more even after adjusting for inflation.
Things could be worse. Euronews reports that in Estonia, rental cost have risen by 214% in the last 10 years, fuelled by migration to the capital city of Tallinn and an influx of refugees from Ukraine. In other parts of Europe, rental prices have increased by 17.6% in the past 10 years, with an increase of 1.7 per cent in the past three months alone compared to the same period in 2021.
Renting in Lithuania’s capital Vilnius has become nearly impossible, to the point that the country’s lawmakers are considering introducing a price cap on rent. According to the Baltic News Network, students are the ones who are suffering the most from these rent hikes, with a budget apartment in Vilnius now costing €400 a month compared to €100 or less in 2021.
Exceptions
While almost all countries in Europe saw an increase in rent prices in the past decade, there were two exceptions: Greece and Cyprus, which actually experienced a decrease in rental prices. In Greece, rent decreased on average by 24 per cent between 2010 and July 2022, while in Cyprus during the same period, rental costs went down by 0.2 per cent.
Eurostat says that the market for buying property is hardly in a good condition either, with house prices across the EU increasing by 48 per cent since 2010. In Estonia, house prices have seen increases of 196% since 2010, while in Hungary, the cost of buying a home grew by 168 per cent, in Luxembourg by 135 per cent, in Latvia by 131 per cent, in Lithuania and Czechia by 130 per cent and in Austria by 121 per cent.
Only in Greece, Italy and Cyprus have prices decreased, with houses now costing respectively 23, 8 and 6 per cent less than they did over 10 years ago.
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