Rents fall in London as pandemic exodus continues
Rooms for rent in west London were among areas that dragged down the average rental price in the UK in the first quarter of 2021, as the pandemic continues to act as a weight on the market.
Room rents in the capital are now down significantly for the fourth consecutive quarter with the average London room rents dropping by 8%, from £771 ($1,070) in Q1 2020 to £706 in Q1 2021.
According to new figures released by SpareRoom in its quarterly rental index, room rents in every London region were down year-on-year. The west-central area of London saw the biggest drop (-20%), followed by east-central (-17%) and west (-11%).
The London postcodes where room rents have reduced the most include SW1 (Westminster/Belgravia/Pimlico) -25%, W1 (West End/Soho) -23% and W8 (Holland Park) -21%, dropping from £1,117, £1,169 and £1,144 to £833, £904 and £900 respectively.
Excluding London, UK rents are up 1% year-on-year, SpareRoom found. In fact, the only UK region apart from London to experience a decrease in room rents was the West Midlands, down 1%.
Alongside London’s sustained decline in rents, SpareRoom research reveals a marked fall in demand v supply for rentals across the capital since the start of the pandemic.
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Matt Hutchinson, SpareRoom director said: “Where people choose to live post-pandemic remains to be seen. The rise in remote working may mean other areas of the UK continue to see increased demand.
"However, as the capital’s key industries, like tourism, hospitality and entertainment start to recover, they’ll mean the return of huge numbers of jobs. As we know, work is one of the biggest drivers in the rental market.”
Figures released last week showed that London's unemployment rate hit 7.2% in the three months to February 2021. The Office for National Statistics said the capital's jobless rate was the highest in the country.
All regions saw a rise in unemployment but London saw the largest jump, with an increase of 2.7 percentage points. The capital's workforce decreased by 60,000 in just the final 3 months of 2020.
Meanwhile, SpareRoom's index found that out of the UK’s 50 largest towns and cities, London has experienced the biggest drop in demand v supply, down 23% year-on-year.
In particular, east-central London has suffered the sharpest fall, down by almost half (-42%), followed by the South East (-40%) and West Central London (-40%).
Ipswich experienced the biggest increase in demand vs supply, up 81% year-on-year. This was closely followed by Poole and Blackpool, up 71% and 59% respectively. Nevertheless, drop in demand vs supply isn’t a London-only occurrence, with Cambridge (-17%), Aberdeen (-14%), Belfast (-13%) and York (-13%) all joining London (-23%) in experiencing large decreases.
The cheapest areas to rent a room in London continue to be SE2/Abbey Wood (£531) and E6/East Ham (£545), with E12/Manor Park (£547) also joining the list in Q1 2021.
At the other end of the scale, the most expensive place to rent a room in the capital was SW7 (South Kensington/Knightsbridge), with an average monthly room rent of £1,082. Followed by WC2 (Strand/Holborn) at £989 and SW3 (Chelsea) at £971.
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East London continues to be the most popular London postcode with the top two spots going to E14 (Canary Wharf/Docklands) and E1 (Shoreditch/Whitechapel), followed by North London’s N1 (Angel/Islington/Canonbury).
Across all UK regions, East Anglia and the South West saw the biggest increase in room rents year-on-year, up 4%. These regions are closely followed by the East Midlands, Northern Ireland and Yorkshire and Humberside, all up 3%.
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