The range of nationalities represented by tenants in our markets is much wider than for buyers. British make up only just over one third of new rental households in H1 2022, broadly matched by Europeans (31%). The position so far in 2022 aligns very closely with the range in 2021.
Compared to the longer term average (measured between 2015 and 2022), British, American and Far East are all represented higher this year than the norm, while Europeans are a little lower. In our markets, there is usually a difference between Half 1 and Half 2 because of the importance of the student market and, in particular, the arrival of overseas students during the summer.
It is interesting to note the raised presence of Far Eastern renters because their share of the market would normally rise in Half 2 but they are already accounting for 17% of rentals in the first six months. It may be that overseas students continued learning online until the turn of the year and returned part way through the academic year. This would also help explain the raised levels of activity in rental markets compared to a ‘normal’ Half 1.
The majority of renters in our markets are aged between 25 and 40 years old. Those under 25 make up around a quarter of renters and only 11% are in the older age groups. That is entirely consistent with the long term average (measured 2015 to 2022). Normally, the share of under 25 year olds is lower in Half 1 and boosted when the students and young graduates arrive in Half 2 but this year has been different in that respect as people return to the capital post-pandemic.
There are distinct differences between our offices. City and Islington are skewed towards under 25s while the 25 to 40 year age group is makes up a higher proportion of all renters in Aldgate and East London.
We noticed a significant increase in the proportion of renters employed in the Tech sector in the first half of 2022, accounting for 18% of all rentals, compared with a long term average of 10%. In our Islington and Shoreditch office, their share was as high as 26% – reflecting the importance of tech employment in this part of London.
Students are always under-represented in Half 1 and over-represented in Half 2. So far this year they have made up 10% of rentals against a long term average of 24% but we would expect the normal distribution to be restored over the summer.
Given the shortage of supply of rental stock this year, some renters are beginning their searches earlier in order to secure a property and that will create additional pressures on space when students return en masse in the weeks ahead.
Singles accounted for 38% of all rental households in our markets in H1 2022 but in the Aldgate office they made up 54%, in stark contrast to East London where they only made up 17%.
This will, in part, be explained by the nature of the housing stock which is more likely to be houses in East London and apartments in and around Aldgate. It also reflects the typical demographic profile of each market. 46% of East London households are couples but only 15% in Aldgate. We noted in our last report that singles made up a disproportionate share of renters and speculated that it was caused by a return to the city of office workers who had relocated families and now needed a base in London for a few nights a week. This difference between Aldgate and East London backs up that theory.