Rents will easily outpace house prices over the next five years as the private rented sector continues to expand, believes Savills (SVS). The upmarket estate agent expects house price growth of 12 per cent in the UK "mainstream" market, which excludes top-end properties, over the next five years - a 3 per cent loss in real terms. But rental growth of 18 per cent is forecast over the same period.
The big theory behind these numbers is that renting will become more and more common. "Owner-occupation has been in decline since the turn of the millennium, but it's only since the credit crunch that it has become really noticeable," says Yolande Barnes, head of residential research.
With the average first-time buyer deposit running at about 80 per cent of average income - compared with 10 per cent in the early 1990s - more households need to rent for longer. Supply of homes to rent, meanwhile, remains constrained by tight finance and fragmented demand. The total value of buy-to-let loans issued so far this year is £11.8bn - up 19 per cent on the same period last year but still scarcely more than a third of the 2007 peak. Meanwhile, insurance companies have long talked about re-entering the sector, but have yet to find a way to source bulk portfolios.