The JLL report also points to the need for more homes for sale in the market.
They said: “JLL predicts that this undersupply will worsen further, with a cumulative shortfall of 720,000 homes between 2023 and 2028.”
The lack of supply is one of the main reasons rents are on the rise.
According to the Homelet Rental Index, the average UK property price is £1,283 – 9.56% higher than the same point last year.
JLL expects further rental cost spikes over the next few years, stating that the “imbalance between rental stock and tenant demand drove rental growth to double-digit highs in 2023.
“Over the next five years, we expect the lack of new rental stock – through fewer new home completions and a more challenging interest rate environment, will mean we see rental growth exceed wage growth.”
The group expects a rental growth of 5% in 2024.
For those investing in property, this means higher rental yields for the next couple of years.
With house prices down and rental costs up, landlords are seeing higher gross rental yields on their properties, especially in regions like the North West, where property prices are well below the national average and rental costs fall in line with the rest of the country.
