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Expats worldwide face higher rent as building costs and demand for new homes outstrip the number of properties available.
The latest global living survey for expats has detected that these supply problems hamper many housing markets with a negative impact from local issues.
Many countries are battling high inflation that took hold during the coronavirus pandemic, which has forced up interest rates and home prices.
These economic woes led landlords to put up rents to cover higher mortgage repayments, while renters cannot afford to buy because they need to borrow more. These tenants rent for longer, leaving fewer homes for new renters.
Many markets see fewer properties for sale, another factor in rising house prices.
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Landlords Switch To Holiday Lets
Meanwhile, landlords have switched vast numbers of rental properties in tourist destinations to more profitable short-term lets rather than accept lower returns from long-term lets.
Expat benefits advice firm ECA-International highlights North America and Europe as markets impacted by the state of the global economy.
A similar survey a year ago identified more than half of US cities had double-digit rent growth.
This year is a different story.
Rents are rising but at a more sluggish rate as the market settles and inflation slows compared to the rising cost of living in many countries.
Only 2 US Cities Buck Trend
Only two cities currently have rent growth bursting through the 10 per cent mark – New York and Indianapolis.
New York’s popularity with Americans, immigrants and expats has more consistent demand from renters despite financial uncertainty.
In Indianapolis, a local economy with plenty of well-paid jobs and a shortage of homes to let are pushing rents up.
Florida’s warm weather is attracting remote workers from cooler areas. Rents are rising fast in Tampa (7 per cent) and Miami (6 per cent).
Here’s a snapshot of how rents are progressing across the USA:
|City||State||Rent increase 2021-22||Rent increase 2022-23|
|New York||New York||13%||10%|
Canada is lagging behind the US market by about a year, with double-digit rent increases across many cities – notably, Calgary and Vancouver (14 per cent) and Toronto (10 per cent).
War Exodus Fuels Rent Crisis
Landlords in Europe report rent rises in the teens and twenties.
The biggest returns come from properties in cities where digital nomads prefer to work.
Many refugees from the Russo-Ukraine War have soaked up rental homes as families take shelter across Europe, especially in the eastern countries.
The war has impacted Poland’s rental market. Poland neighbours both Russia and Ukraine. Cities like Krakow (21 per cent), Gdansk (18 per cent) and Warsaw (13 per cent) struggle to meet the demand for homes.
Besides Ukrainians fleeing the war, hordes of Russians of military conscription age have exited Moscow and other large Russian cities to avoid fighting. Russians are driving rents up in places like Limassol, Cyprus (35 per cent), Tbilisi, Georgia (23 per cent) and Yerevan, Armenia (10 per cent).
Big City Rents Soar In UK
The UK has a market of two halves. While property sales slump due to inflation and high interest rates, rents have prospered from a shortage of homes to let and surging tenant demand. Major cities posted the highest rent growth, such as London and Glasgow (14 per cent) and Manchester (13 per cent).
The rental market across Europe is fractional, with expats in some cities reporting crazy rent increases – especially where AirBnB-style holiday lets are less regulated.
Cities with the highest rent increases include Spain’s Valencia (18 per cent), Barcelona (17 per cent) and Berlin (13 per cent). The German city has a burgeoning tech sector and has welcomed many Ukrainian refugees.
Away from North America and Europe, the expat destinations of Singapore (28 per cent) and Dubai (30 per cent) have seen dramatic rent growth.
Singapore And Dubai Rents Up A Third
Singapore needs more homes, while construction delays and a shortage of building land grip the market.
Dubai has also seen more Russians snapping property to rent since the war started in February 2022. Claimed unfair rent rises have led to confrontations between landlords and renters wanting to renew their tenancies.
The outlook for expat rents is grim, with hot markets burning even hotter in the short term. Until more homes are built and interest rates fall, the chance of rents falling seems distant.
Rising rents impact expat take-home pay. Research shows half of companies set accommodation allowances for expats working abroad at the start of the contract and may not review the figures again.
As one of the most expensive allowances, expat workers should ensure regular reviews are written into their remuneration packages.
Expat Rents FAQ
Accommodation or housing allowance is one of the components of expat pay packages. The package can include costs for rent, domestic help and utility bills.
EXpats can ask for allowance reviews at any time. It’s a good idea to have the option for a review written into a contract.
It’s easy to check rents online through specialist expat websites or more general property portals for your destination city. Try Numbeo for average rents and living costs.
Think of online rental prices as indicators of what you might pay rather than figures that are accurate to the penny.
Most cities have expensive luxury homes with rents far above average prices. However, the most expensive cities, including Geneva and Zurich, are generally considered Swiss.
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