The latest rental growth and rental affordability report as at July 2017 has been published by @HometrackGlobal.

The headlines are:

• Residential rental growth over the last decade has ranged from +45% to -7% across regions. The variance is largely explained by local economic factors.
• Rents have tracked earnings over the long run. Rental affordability is worst in London while it is the best for a decade in regions outside southern England.
• Rents are expected to fall by 1-2% in London over 2017 while outside London rents are set to increase by 3% with higher growth in the Midlands and Eastern regions.

It could be good news for tenants, if not landlords, all round.

Affordability is the most stretched in London, so the 1%-2% predicted fall could help tenant budgets, while in the regions the affordability of renting is the best for a decade.

Landlords in some regions have not done at all badly over the last decade, demonstrated nicely by Hometrack’s rents and rental growth table. London rents have grown by a whopping 45% over the decade, although Wales and the north have not shown rental growth.

Hometrack reports that at the national level rental affordability has been broadly stable over the long run with rents accounting for between 27% and 32% of gross annual earnings over the last 12 years. This is not surprising as tenants can only allocate a certain percentage of earnings towards housing costs. This feature of the market makes investing in housing attractive for those seeking an asset where the underlying performance is linked to earnings growth.

Regional affordability annual averages for the period 2005-2016 are neatly summed up in Hometrack’s table below, demonstrating the seemingly (until now?) inexorable rise in rents in London and the south-east, with rents in Wales and the north falling away.

You can see the full Hometrack report ‘Rental growth and rental affordability - July 2017’ here.

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