London Retains its Position as the Most Expensive City to Rent in Europe and 4th in the World
- London’s rental accommodation cost has increased by £121 per month on average
- Edinburgh rent shot up by £106 per month as demand for rental accommodation rises once again
- The UK’s second cities, Manchester and Birmingham, both see small rental cost increases (£30 and £25 per month, respectively)
- Dublin sees one of the steepest rises in average rental costs, jumping over 6% from last year
London continues to hold the top spot for the most expensive rental accommodation in Europe for expatriates, with an increase of £121 per month. The average cost of a three-bedroom, mid-range home for expatriates is now £5,308 per month (USD 6,959), according to the latest Accommodation Ranking report published by global mobility expert, ECA International (ECA).
“London remains attractive to workers in the UK and from abroad, despite anticipated economic disruption from Brexit. In addition to this, the phasing out of tax relief on mortgage interest payments for buy to let landlords has acted as a brake on supply. Removing this tax relief has had the intended effect, a reduction in the number of new buy-to-let landlords, but a knock on effect has been a reduction in the availability of rented accommodation” said Alec Smith, Accommodation Services Manager at ECA International.
Manchester and Birmingham have seen a small increment of £30 and £25 per month respectively, which will be welcome news for renters in Birmingham after a staggering £110 per month increase last year.
The average cost of a three-bedroom home in Manchester, which ranks 29th in Europe, is £1,874 (USD 2,457) and in Birmingham, ranked 32nd, is £1,831 (USD 2,401).
Housing crisis in Edinburgh continues to drive up rental costs
A growing population and an increase in Airbnb rental properties has caused rental accommodation prices to continue to rise in Edinburgh. The average cost of a three-bedroom, mid-range home in the Scottish capital has risen by £106 per month, up to £1,635 (USD 2,144), the highest in over five years.
Meanwhile, the slowing oil and gas industry sees rental costs dip further in Aberdeen, resulting in the Scottish city’s lowest ranking since 2012, as the average cost of the same type of property in Aberdeen now costs £1,160 (USD 1,521), down from £1,235 in 2019.
“In addition to a growing population due to the high standing of liveability attracting expats, the prevalent Airbnb market has also impacted the cost of rental accommodation in Edinburgh, as landlords monopolise the short-term rental market driving up prices” noted Smith.
Top 10 most expensive cities to rent in the world
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Top 10 most expensive cities to rent in Europe
ECA’s annual rental accommodation report analyses the rental prices for a mid-market, three-bedroom home in areas commonly inhabited by expatriates.
Rental highs and lows across Europe
Dublin remains in the top five most expensive locations in Europe for rental accommodation, with the average rent now €3,613 per month (USD 4,086), making it costlier than other European capital cities such as Paris at €3,461 (USD 3,914), Berlin at €2,354 (USD 2,662) and Madrid at €2,393 (USD 2,706).
Cyprus saw the biggest rise in expatriate rental costs in Europe, with Limassol’s rent up USD 53 or €128 per month (USD 1,197 / €1,058) and Nicosia up USD 40 or €120 a month (USD 1,220 / €1,079).
Smith said “Growing interest in the schools sector is a big factor in the spike in Cypriot rental prices; the number of international students has almost tripled in the last five years and the number of higher education providers have more than doubled, this has led to an increase in demand and a housing shortage.”
“The Airbnb market also had an impact in reducing supply by converting long-term rentals into short-term, and the rejuvenation of the construction industry following the Cypriot financial crisis has also brought more expat workers to the area” added Smith.
Many German cities also saw big jumps in the average rent, with Munich, Berlin and Stuttgart all seeing increases of over 6% from last year.
“There has been a property boom for the last 10 years in Germany, as its high quality of life, policy benefits for expats, and sustained growth in employment rates and GDP makes it an attractive area to live and set up business. Home ownership is also very low, with the percentage of renters in Berlin being as high as 85%; construction capacity has been lagging behind this high demand and there is a critical housing shortage. The German government are putting in rent controls to try and limit landlords taking advantage of this situation, such as rent freezes and limits on rental increases after modernisation, but in general these have not yet come into effect.” said Smith.
Kiev saw big rises in rent and jumped 16 places and back into the global top 50. “The rise of Kiev in the rankings is largely due to a return in confidence from many MNCs, with businesses and expats returning to the city after years of turmoil” noted Smith.
Rent hike in the US
The US has become considerably more expensive for expats with nearly all US cities in the rankings having risen, some considerably. The US now has three cities in the global top ten, these being New York, San Francisco and Miami, as the strength of the US economy endures, with the dollar gaining against most major world currencies.
Smith said “Generally speaking, the US cities in our rankings have risen due to the strong performance of the dollar, but there are also local reasons for the rises to expatriate rental costs too. For example, in Boston, biotech and pharmaceutical industry sectors have drawn expatriates to the city in large numbers, bolstering demand for properties in prime neighbourhoods, whereas New York saw lower than expected rental increases after Amazon withdrew their plans to establish a second headquarters in Queens.”
Hong Kong remains the most expensive location in the world for expat rent
Hong Kong has been named the most expensive location in the world for expat accommodation, for the third year in a row, with the average monthly rent standing at a whopping USD 11,318, an increase of over 3%.
Smith said ““Despite another increase in rental costs for expatriates living in Hong Kong, the rise was lower than the 4.9% rise seen the year before. Hong Kong has the most expensive rents due to a number of factors, such as the high population density of the territory and limited opportunities to build new homes, which combine to drive rental costs upwards. However, in light of the prolonged anti-government protests and coronavirus outbreak currently underway, we expect to see rents fall throughout 2020 as the number of overseas workers in Hong Kong drops significantly and the usually high demand for housing is tempered.”
Notes to editors:
- Rooster will coordinate comment and interviews for Alec Smith, Accommodation Services Manager, ECA International.
- Figures used in this release were taken from ECA’s January 2020 Accommodation Survey.
- The survey was based on the average rental prices for a three-bedroom home in the mid-range of the expatriate market.
- The rental prices were collected in September 2019 and have been converted into US dollars for ease of comparison using the September 2019 exchange rate.
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ECA International’s housing data
This ranking is based on data from ECA’s accommodation reports, which we began publishing annually in 1996. The reports provide comprehensive and reliable information for locations worldwide on the rental trends, types of accommodation and districts commonly sought by expatriates. To ensure impartiality and to maintain the accuracy of information, data from a number of sources is used to compile each accommodation report. ECA uses a global network of estate agents, relocation agents and extensive in-house research into worldwide property markets to establish and verify the housing data in the reports. Rental prices are collected annually. This housing data is also fed into ECA’s Accommodation Tool which can be used to set, manage and review the right accommodation allowances for international assignees.