Rental market booms as house prices soar

The soaring cost of buying a home in London is driving more and more residents to rent instead, new figures show.

Britons now account for 44 per cent of the rental market in the capital - a jump of three per cent in the past three months, figures released today show.

Five years ago, the proportion was just 39 per cent.

Meanwhile, the proportion of renters from the US and Canada dropped two per cent to 22 per cent in May, June and July from the previous three months.

European renters stayed the same at 21 per cent, said estate agent Knight Frank. People from the Far East continue to make up four per cent of the market, and the Middle East one per cent.

Spokesman Nick Barnes said: 'Potential first-time buyers either cannot afford the high prices of houses in London or are waiting to see what the market will do.

'Other factors are a recovery in the financial and professional sector and increased choice in the rental market.

'However the trend will not necessarily continue as it has.' The average London home is now worth about £255,131 - compared with £106,242 in Scotland, Britain's cheapest area.

As a result, it is estimated that more than a third of first-time buyers in the capital need help from their families to get on the property ladder.

Across Britain, the average first-time buyer in the first half of the year paid £111,250 for their home.

In April, prices for all properties went up by 4.5 per cent, boosting the average cost of a house to £168,600.