A new annual research reveals that rent in London is the most expensive in Europe for expats, averaging US$7,189 (GBP 5,187) per month for a three-bed home.
Despite uncertainty around Brexit, demand for rental accommodation in London remains steady as young professionals are increasingly unable to buy within the M25.
Although rental costs decreased in central London (zone one) this year, rent in outer London remained stable. London maintains its position in the top five most expensive for rental accommodation in the world (4th), followed by Moscow, Zurich, Geneva and Dublin.
According to the latest annual research published by global mobility experts, ECA International (ECA), the average rent in outer London is on the rise at US$5,543 (GBP 4,000) per month, whereas the average rent in central London has fallen to US$9,701 (GBP 7,000) for a three-bedroom apartment.
“A polarisation of rent changes was observed between properties in central and outer London since the previous year. Rents fell in prime neighbourhoods in London travel zone one, with salaries for top jobs largely stagnant and demand waning. Rents in outer London were more stable, but are anticipated to increase with London property purchases growing ever more out of the reach of many Londoners,” explained Alec Smith, Accommodation Services Manager at ECA International.
Robust economy outside London
The jobs market is relatively buoyant in the UK which has caused a general increase in demand for rental accommodation in some of the UK’s major cities. Manchester continues to have the most expensive rental accommodation in the UK outside of London and has re-entered the top 120 most expensive in the world (119th) this year. Ranking 30th in Europe, average rent in Manchester for a three-bedroom home is now US$2,555 (GBP 1,844) per month, US$351 (GBP 54) more expensive than last year. Birmingham has seen the largest rental cost increase in the UK at a staggering US$415 (GBP 110) per month, and is the 36th most expensive city in Europe to rent in.
Smith continued: “Central Manchester has seen a large population growth in recent years and is now widely considered the second most important city in the UK economically. Numerous companies have relocated to the city, fuelling demand for rented accommodation, particularly in central areas.”
Other than Central London, Aberdeen is the only UK city to see a decline in rental costs, dropping by USD 40 (GBP 190) per month, however Glasgow remains the cheapest city in the UK to rent a three-bedroom home, costing on average US$1,455 (GBP 1,050) per month, GBP 794 less than in Manchester. Rent in Edinburgh on the other hand has re-entered the top 50 most expensive in Europe, costing US$2,119 (GBP 1,529) on average per month and up US$360 (GBP 101) on last year.
“The ongoing decline in the oil and gas industry has reduced the number of overseas renters in Aberdeen. With remaining workers having their housing budgets cut, average rent levels have followed suit. Changes in Scottish legislation in the past couple of years have affected the supply of rental accommodation in Edinburgh while demand remains strong. Tax increases on the purchase of second homes have increased landlords’ costs, while the phasing out of shorthold assured tenancies means many landlords have increased rents to cover the perceived greater risks in renting out their properties.
Dublin rent enters top five most expensive in Europe
Dublin is now the 26th most expensive city in the world and fifth most expensive in Europe to rent a three-bedroom, unfurnished home. The Irish capital has risen by a staggering 35 places since last year’s report by ECA. It reveals the average rental price has risen by USD 880 (EUR 277), an 8% increase on last year’s figure of USD 3 311 (EUR 3 129) a month.
Smith said: “The past 10 years have seen a significant turnaround in the fortunes of Dublin’s residential rental market. The global financial crisis exposed a property bubble in the Irish capital and rents have increased significantly with each subsequent year of recovery. The cost of renting has also been affected by elevated demand from international companies relocating staff while looking to take advantage of Ireland’s low corporate tax rate.”
Rents rise across the Eurozone
Rental costs across Europe rose significantly through 2018, due in part to the strength of the Euro. Whilst Dublin saw the biggest rises in expatriate rental costs in Europe, major cities such as Madrid, Rome, Paris and Barcelona all saw increases over USD 500.
In Spain, Madrid saw the average expatriate rent rise by US$650 to US$2,828 (EUR 2,299), whilst in Barcelona rent increased by US$566 to US$2,521 (EUR 2,049).
Smith said “Madrid and Barcelona have reversed years of falling rents that followed in the wake of the global financial crisis. Their markets are flooded with renters, both from the local young professional population, and international assignees. Property purchase is now out of reach of the majority of city residents, keeping competition for tenancies high.
Meanwhile in Paris, as the city continues to target attracting business due to Brexit, demand remains strong for property in the French capital and expatriate rent has risen to US$4,090 (EUR 3,324), an increase of over US$700.
