UK rents to rise 11.4% by 2023 – CBRE

UK rents are predicted to rise 11.4% in the next five years, according to a forecast by CBRE.

Alongside fairly ‘moderate’ growth over 1.8% in UK house prices, the property group forecasts that rents will rise 1.3% in 2019.

The report, which looks at how economic, political, financial and technological trends might affect property markets, foresees further growth in rents leading up to 2023, supported by a drop in housing supply in the PRS amid ‘dampened investor demand for buy to let’ and growing demand for rental homes, particularly from lower-earning younger people.

CBRE estimates that rents are likely to rise 1.3% in 2019, followed by growth of 1.9% in 2020, 2.5% in 2021, 2.7% in 2022 and a further 2.6% in 2023.

Miles Gibson, CBRE’s head of UK research, said: “We expect rather weak house price and rental growth over the next year, but we think that the lack of supply and low interest rates for mortgages will hold prices up.”

He added that weak supply and strong demand is “creating a lot of interest among investors” in the student accommodation and build-to-rent sectors, especially in terms of institutional capital.

Some £2.1bn of institutional funds had been invested in the year to Q3 2018, 51% higher than the same period of 2017.

Investment is on a firm upwards trajectory, and investment volumes in 2019 seem likely to exceed 2018’s total.

UK house price and rent forecast, 2019 to 2023, %, annual and cumulative: 

Source: CBRE Research

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