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    Demand returns to city centres

    In cities such as Birmingham, Leeds and Manchester, average rents have risen significantly in the last three months. This marks the ‘swing back’ of the pendulum. Renters are beginning to return to a city life similar to that of pre-COVID. During the beginning of lockdown, demand in city centres declined dramatically as tenants lost the desire to pay city centre prices without any of the amenities. Consequently, as offices, bars, restaurants, galleries, theatres, and other city centre attractions have reopened, rental demand has risen and pushed up rents.

    London is the only city that has struggled to keep up with the other UK hotspots. Over the last 12 months, London rents sharply declined to the lowest levels in over a decade. Now, they have plateaued. The average rental change across London is -3.8%, compared to -9.8% in February this year.

    Fast-moving market

    Another sign that the rental market is picking up speed is the average time taken to rent. In July last year, the average time between listing a rental property and agreeing on a rental tenancy is only 15 days – a five-year low. This demonstrates how robust and active the market is. In certain coastal locations where demand has been exceptionally high over the last 12 months, the time taken for rent to be agreed is just over a week.

    As mentioned, August is in line with seasonal trends. However, over the coming months, rental demand is likely to remain much higher than usual amid a move back to city centre life. Not to mention, the unpredictable nature of the pandemic means COVID rules could change at any moment. In which case, these predictions could change. However, if society remains as it is, the demand for rental property coupled with increasingly low levels of supply will continue to put upwards pressure on rents.

    CityRise Verdict

    Tenant demand has continued to surge, and supply has remained limited. This is a theme we expect to continue for the foreseeable future, especially as tenant demands are shifting to newly built properties with on-site amenities and open space. In particular, Birmingham has seen significant growth in rental demand. Birmingham remains the most popular city for London leavers to flee to. As a result, growth has been particularly strong in this area. Any area that is considered a commutable distance to London has shown exceptional growth over the last year. Which, with the introduction of the HS2, will drive up demand in Birmingham even more.

    The North-West’s market has also been extremely resilient, which is partly due to having such strong tenant demand. Over the last 12 months, 54% of tenants in the North-West have been under the age of 29 – highlighting the North-West as a prime location for young professionals. This also demonstrates the need for more rental properties in the North-West to meet the demand. In particular, new build properties with sustainable, modern amenities that especially cater to what modern tenants are looking for.

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