Once again, rental prices across the United Kingdom have shown a robust increase in the year leading up to July, surpassing house price rises by more than twofold, as indicated by official data.
According to statistics from the Office for National Statistics (ONS), private rental costs surged by 5.3%, with Wales experiencing the most significant escalation. Private rental prices in Wales soared by 6.5%.
This upward trajectory has been steadily building over the past two years. The recent UK-wide figure of 5.3% represents a slight uptick from June’s 5.2%, marking a notable increase from the meager 1.3% recorded two years prior.
Scotland also witnessed a rental growth rate that outpaced the UK average, registering a 5.7% increase.
Research conducted by Sky News has underscored a shift in demographic, revealing that renters now constitute the majority in the UK, followed by outright homeowners and then mortgage holders.
Within England, the regions most severely affected by the surge in rent prices include the West Midlands, Yorkshire and the Humber, and London, where rent prices escalated by 5.5%. Conversely, the North East experienced the most modest growth in rent prices at 4.6%.
London’s annual percentage rise in rental prices reached its highest level since the ONS began its data collection in January 2006. A significant portion of the UK’s rental expenditure, specifically a third, is concentrated in the capital.
This trend emerges against a backdrop of limited supply, a growing number of renters, and a decrease in available properties, which have collectively driven prices upwards for landlords. Surveys suggest that this trend is likely to persist.
It is important to note that the ONS data exclusively pertains to private rentals and excludes social housing.
House price statistics, also released by the ONS, revealed a 1.7% increase up to June, indicating a slowdown from the 1.8% rise observed in May. The average house price stood at £288,000, representing a £5,000 upswing from the previous year, yet remaining £5,000 below recent peaks.
When broken down by country, average prices increased by 1.9% to reach £306,000 in England, 0.6% to £213,000 in Wales, and 2.7% to £174,000 in Northern Ireland. Scotland, however, maintained an unchanged average house price of £189,000.
Escalating interest rates have contributed to higher mortgage payments, deterring potential buyers who are cautious of elevated asking prices.
Additionally, part of the moderation in price rises can be attributed to the surge in house prices observed in August 2022, a period characterised by low interest rates and stamp duty relief provided as part of pandemic-era support measures.