Just like the supertall towers that are rising to dizzying heights, in places like New York City, rental prices just keep getting higher.
According to new findings from Knight Frank, the luxury rental markets in the Big Apple, London, and Singapore have spiked over 50 percent since the beginning of 2021. Manhattan specifically has seen rental cost hikes of 56 percent in the last two years alone. In that same time period, Singapore’s residential rentals increased 53 percent, and in London, prices grew 51 percent.
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“Rents have risen by more than 50 percent in key global cities in just two years and are continuing to rise at three times their pre-pandemic rate,” Liam Bailey, global head of research at Knight Frank, said in the report.
The real estate consultancy attributed the surge in apartment prices to several different factors. For starters, many of the people who fled the city during Covid are returning to these metro areas in droves now that social distancing restrictions and lockdowns have been lifted, which has increased demand.
Additionally, would-be buyers faced with higher mortgage rates and home values are finding that renting in the interim might make more financial sense, even though it’s contributing to the jacking up of rental prices.
The report also notes the overall lack of prime housing supply, some of which can be blamed on construction delays and material and labor shortages that occurred throughout the pandemic. “Affordability of housing is set to become the leading political issue within the next 12 months. The need for honest conversations about real supply-side solutions is becoming critical,” added Bailey.
In New York, the rate at which rents are growing is beginning to slow down. The annual growth dropped from 10.6 percent last quarter to 6.2 percent, which the report attributed to affordability constraints. For context, the average annual rental growth pre-pandemic clocked in at just 2.2 percent.
That said, don’t expect prime residential rents to be pushed down to what they were before the pandemic.
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