The increasing demand for houses, matched with the diminishing supply is resulting in property prices shooting up. This leaves the people who can’t afford to buy stuck renting. Also, because there isn’t enough rented accommodation to satisfy the demand, rental prices have shot up.
According to HomeLet, the average rental cost in London averaged £1,596 in 2015. Comparing that to an average salary (£30,338), that means Londoners are spending approximately 80% of their salary on rent.
That leaves people with around £370 to spend on everything else, including utility bills, travel, food etc. So it’s understandable how many people are struggling to save for a house in London, which have an average price of £531,000.
Other cities in the UK also witnessed a rise in rental prices due to the housing shortage affecting the whole of the country. Bristol and Brighton, for example, saw a year-on-year rise to an average for £904 and £1,078 respectively.
CEO of Barbon Insurance Group (HomeLet’s owner), Martin Totty, said: “Rents in London have continued to rise more quickly than in most areas of the country, but not at quite the pace of 2014. Meanwhile, average rents outside of the capital rose more quickly last year than in 2014.
“As a result, we saw a narrowing of the rent inflation gap between London and the regions last year — is this a trend we will see continuing in 2016 from tenants seeking value for money in the private rented sector?”
Rent is still very high in london, however. So unless the prices take a significant nose dive or average earnings rise, most people will still look to split the costs by living with a partner or lots of friends.