According to Zoopla's forecast, the rental growth rate in 2024 will halve to 5%, down from the current level. This prediction is based on various factors, including a sluggish labor market, slowing income growth, and increasing affordability pressure.

Richard Donnell, the Executive Director of Zoopla, stated, "The slowdown in rental growth in 2024 is primarily constrained by a sluggish labor market, slowing income growth, and the ongoing increase in affordability pressure, especially in the south of England."

As economic constraints become more apparent in many markets, some areas have seen asking rents become too high, and the number of rental properties with rent reductions exceeding 5% is increasing.

However, for cities in regions where economic constraints are less pronounced, there is still room for rent to rise, exceeding the UK average, although this situation is not expected to persist.

London has been a leader in the rental market, but over the past year, the growth rate of rents in London has significantly slowed, dropping from 17% a year ago to 9%. During the pandemic, rents in London even decreased by 10%, so the significant rebound in rents is not surprising.

The inner-city areas of London, such as the City of London, Westminster, and Hamlets, have the lowest annual rental growth rates, at 6.3%, 7.3%, and 7.3%, respectively.

Donnell added, "The UK has passed the peak of rental growth, which is good news for renters who have seen rents rise by almost a third (31%) over the past three years. London will be the first to slow down, dragging down the UK's growth rate."

The rental market has long been in a state of supply stagnation and strong demand, pushing up rents. Factors driving demand growth include a robust labor market, the reopening of the economy after pandemic lockdowns, record immigration numbers, and higher mortgage interest rates, making it more challenging for first-time buyers to purchase homes.

Although in 2024, the imbalance between rental supply and demand will not completely disappear, the market is expected to be more balanced than in the past three years.