Leading online property platform, Rightmove, has recently announced that the average asking rent outside London has reached a new record high of £1,190 per month, with asking rents across Britain, excluding London, showing a consistent upward trajectory every quarter since the end of 2019.

In Q1 2023, average asking rents in London surpassed £2,500 for the first time, recording a new all-time high of £2,501 per month. This revelation is not entirely surprising as the capital's housing market has been known for its high demand and property prices for many years.

Rightmove’s director of property science, Tim Bannister, has observed early signs of improvement on squeezed supply levels this year, although he admits that with no significant influx of new properties becoming available to rent currently on the horizon, the mismatch is set to continue for some time.

As it turns out, properties in popular areas with affordable asking rents are being snapped up almost immediately, and homes are finding tenants much more quickly than in 2019. Despite some early signs that the gap between supply and demand is starting to narrow a little, Bannister believes it will still feel very competitive for tenants trying to secure a home.

Iwona Hovenko, real estate analyst at Bloomberg Intelligence, believes that challenges continue to face the rental market. She explains that the rental supply-demand imbalance is only likely to worsen in the near-term future, as smaller private landlords exit the sector due to high taxation, interest rates, and the steep costs to bring their properties to at least EPC band C in the next few years.

The shortage of qualified labour and the still-high prices of materials may make that job even tougher. Moreover, the same factors are also hitting the supply of new homes. Hovenko also notes that the ranks of renters may continue to expand due to potential buyers being priced out by high interest rates, lower mortgage affordability, and squeezed disposable incomes. Some would-be buyers may have also shelved their purchase plans while waiting for house prices to fall, and all of these factors may be exacerbating demand for rental housing at a time when supply is likely to shrink further.