The latest PayProp Rental Index for Q2 2019 shows growth (measured year-on-year) of 3.86%, a similar number to the growth rate measured in Q1 2019. PayProp's Johette Smuts says that adding a moving average trendline highlights longer-term trends. In this case, it shows good news for landlords - rental growth remained steady over the last quarter and is not trending downward anymore. | |
Long-term insights“Flat growth started in 2018 and 2019, so it’s easy to forget that we had higher-than-inflation rental growth for much of 2017,” says Smuts. “In that year, the average growth rate over 12 months was 6.45%, compared to inflation of 5.3%. Before that, in 2016, rental growth was much more in line with inflation.”For the last two years, however, Smuts says inflation has been outpacing rental growth rates, even though the rate of growth in consumer prices has dipped over previous years. Opposite perspectivesSmuts adds that in all rental growth discussions, one should be mindful that there are two sides to the coin.“While landlords and agents prefer higher growth, as it directly impacts their bottom line, tenants prefer the opposite.” Regional anglesShe adds that unpacking rental growth from various regional angles puts lower growth into further perspective. | |