The rental market in London has reached a point where the average woman would need to double her salary in order to afford the high rents. According to analysis by estate agents Hamptons International, average rents in Greater London were £2,234 in May, a 13% increase compared to the previous year. These skyrocketing rental prices are now at their highest level against earnings in seven years.
Women are particularly affected by these steep increases, as rental costs now consume approximately two-thirds of their full-time earnings. The Office for National Statistics (ONS) considers rent to be affordable if it accounts for 30% or less of household income. The rising rents and relatively stagnant wage growth mean that a larger portion of both men’s and women’s incomes is being allocated to rent.
This affordability crisis in London’s rental market coincides with increasing concerns among homeowners, as mortgage costs in the country are approaching a 14-year peak. The average five-year fixed-rate home loan has climbed to 6.01%. Additionally, home builders have slowed down the rate of constructing new homes due to anticipated weaker demand resulting from higher borrowing costs, further exacerbating the problem of supply failing to meet demand.
To compound the challenges in the rental market, rent prices have been outpacing wage growth for 21 consecutive months, according to property portal Zoopla. The report suggests that rental inflation will only slow down if there is a significant increase in supply or a decrease in demand, which seems unlikely given the impact of rising mortgage rates on first-time buyers, the strength of the labor market, high immigration rates, and the upcoming period of peak rental demand between July and September.
Over the past decade, women have consistently faced rental levels that exceed the 30% affordability threshold, except for Scotland and the North East of England. These issues in the housing market are adding pressure on both the Bank of England and the government to address and control inflation in the UK.
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