London's sky-high prices thin the ranks of room-to-rent seekers
The cost of renting a room in the capital has held above £1,000 (S$1,726) a month since 2022, when property seekers idled by Covid-19 flooded back into the market as the economy reopened.
But the number of would-be flat sharers has declined steadily since and last month hit 57,600, a drop of about 6,500 from a year before, according to figures shared by SpareRoom, a rental website. That's half as many as there were at the peak in September 2022 and marked the slowest May – one of the busiest months for house hunters – since 2021.
The drop comes as the outlook is being darkened by rising bills, a deteriorating labour market and the US trade war, which is showing some signs of undermining confidence in the economy.
Some of the decline in room-rental demand may be due to prospective homeowners resuming their searches as the Bank of England lowers interest rates. But the larger driver is likely the fact that many young people are opting for the cheaper option of living with their parents instead: An analysis by the Institute for Fiscal Studies showed that almost a third of UK residents aged 25 to 29 lived at home in 2024, up from just one in five in 2007.
That may reflect the worsening job prospects for some young people as employers cut back on entry-level positions and recent tax hikes exert a drag on hiring in the hospitality sector. SpareRoom said that 40 per cent of those under 25 spend more than half of their income on rent, well above what's considered affordable.
'All those people in their 20s who would be driving up demand just aren't there,' said Matt Hutchinson, director at SpareRoom. 'Many young people can't afford to rent or save the required deposit on today's starting salaries so they have no choice but to stay put.' BLOOMBERG
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