Residential rental prices in some cities around the globe are skyrocketing.
The COVID-19 pandemic caused people to flee from cities for more space for lower prices. Now people are returning to cities once again causing rental prices to skyrocket.
Many of the fastest rising housing markets in the world are located in the U.S., according to a survey by British real estate company Savills. Four of the 10 cities in the survey with the biggest rent price surges are located in the U.S., and are some of the most expensive rental markets in the world.
Four U.S. cities—New York, Miami, Los Angeles, and San Francisco—round out Savills’s list of the cities with the fastest rate of rent hikes this year.
New York City has the fastest rising rental prices in the world, matched by Singapore. Rent in both cities has gone up 8.5% over the past six months. New York, Miami, and Los Angeles are three of the seven cities where rent has increased over 5%. Miami with 5.8% and LA with 5.5%.
Savills says the rising prices are from “pent-up demand” during the pandemic combined with a return of international travel in 2022 and reopened borders in most parts of the world.
Rental prices in NYC have been hitting record highs recently. The median price for a one-bedroom apartment in New York is now nearly triple what it was before the pandemic. Landlords in the city typically require rental applicants to have an annual salary of at least 40 times the monthly rent, so renters looking to live on their own would have to earn a minimum of $160,000 a year, says Fortune’s Trey Williams.
While demand is one reason for the surge in rental prices, low inventory is also a major factor. “New York reached the highest rents on record, driven by tight inventory and demand for larger spaces, for which renters are willing to pay a premium,” Savills reports, adding that low inventory in cities, especially for the larger homes most renters are looking, will likely continue to be a driving factor behind high rental prices for the future.
Before the pandemic Hong Kong was considered one of the most expensive and fastest-growing rental markets in the world. Among the cities analyzed in the survey Hong Kong saw the biggest rental price decline this year mostly due to ongoing travel restrictions in the city.
Many citizens leaving Hong Kong have opted to go to Singapore, a factor Savills says has played an important role in the latter city’s rising rent prices.