London Rent Prices Over The Last Decade

Why are rents not up as much as sale prices over the last decade

With more and more people renting privately, how Rental prices are moving has become as important as Sales prices for many Londoners.
In this Blog we are going to take a look at how rental prices have evolved over the last 10 years depending on which part of London you are in.

Rents Not Up As Much As Sale Prices Over the Last Decade

The Bricks&Logic Index shows that average rents across London are up 38% in the last ten years. (Figure 1.)
If we compare this to inflation over the same period (26%), we have about a 12% increase in real terms.

Figure 1

Over the same period, the equivalent sales index is up 65% (Figure2.), or nearly 40% in real terms. Good news for property owners, but with the much smaller rental increases, bad news for buy-to-let investors.

Figure 2

East of London Rents up Much more than South West

As you would expect given the diversity of the London housing stock, this movement has not been the same everywhere.
While the average across London has been a 38% increase, some areas have gone up by over 60% whilst others have gone up by less than 20%.
East areas have seen rents rise far faster than those in the more expensive Central and South West parts of London. (Figure 3)

Figure 3

It is interesting to note that the average sale price of a property in the 5 biggest gaining areas is approximately £435,000, compared to over £1m for the 5 smallest gaining areas meaning that it is the rental on cheaper property which has done best over the last 10 years.

We can illustrate this further by looking at a chart of rental price evolution over the last decade in TfL zone 1 (average sale value of £875k) versus TfL zone 4 (average sale value of £440k) (Figure 4)

Figure 4

If you want to dig deeper into parts of London that matter to you, or you just want to keep an eye out on how London rental prices are changing as we enter this new decade then check our Rental Market Overview.