Zoopla's latest rental market report found that rents are increasing fastest in the UK’s largest cities and that unaffordability for single earners has hit its highest level for over a decade.
The report said that across the UK rent now accounts for 35% of the average income of a single earner.
In the past year, London rental prices have soared 17% or £273 per month.
The price hike has been seen in other large regional cities including Manchester, up 15.6%, Birmingham (12.3%), Glasgow (14.1%), Bristol (12.9%) and Sheffield (2.4%).
The average rent for new lets increased by £117 per month since last year, reaching £1,078 per calendar month.
Rental growth now stands at 12% per year. This is double the growth in earnings, which stands at 6% per year.
Richard Donnell, executive director at Zoopla said: “Renters are paying the price for low levels of new investment in private rented housing over the last six years. A chronic lack of supply is behind the rapid growth in rents which are increasingly unaffordable for the nation’s renters, especially single-person households and those on low incomes. Many are also staying put to avoid the worst of rent increases.
“Renters are having to adopt a range of strategies to deal with rising rents. We have seen a rapid increase in demand for one and two-bed flats while some renters are now considering sharing a property to cover the cost of rent. Others may now need to stay at home with parents or relatives for longer until they can afford to rent privately.
“Only a big increase in investment in the sector will ease the pressure on affordability and boost consumer choice. In the short term, we expect the growing unaffordability of renting to reduce rental increases in 2023 to 5%.”
Rents are showing no sign of slowing down despite cost of living pressures.
The Zoopla report found that there was a chronic demand and supply imbalance for rental properties in the UK with the supply of homes for rent down 38% in comparison to the five-year average and down 4% in comparison to last November.
In contrast to this, rental enquiries per estate agency branch were shown to have soared 46% above the five-year average.
Rising mortgage rates limiting access to homeownership for first-time buyers was found to be a major factor in boosting rental demand.
Michael Cook, group managing director for Leaders Romans Group (PRS) said: “As property sales slow, the number of people continuing or returning to rent is rising, causing an even greater supply and demand imbalance within the rental market.
"The gap in the supply of rental properties is making properties more desirable, creating a pronounced demand in the market.
"For example, the competition to rent high-quality flats is reflective of greater instability in the mortgage market, which will certainly continue as we navigate through the recession.”
The Zoopla report forecasted market conditions in 2023 and said that the average proportion of earnings needed to pay rent would be stretched even higher to 37% if the rent rise trend continues.