Rents in the UK are rising at the fastest rate since records began while house prices have slowed, latest figures reveal.
Private rental prices paid by tenants in the UK increased by 5.5 per cent in the year to August 2023, up from 5.3 per cent in July – the biggest percentage rise since records started in January 2016.
However, house price rises slowed to 0.6 per cent in July, down from 1.9 per cent in June, according to latest figures from the Office for National Statistics (ONS)
Aimee North, of the ONS, said: “Annual inflation for UK rental prices continues to rise, setting a record high for the seventeenth month in a row. Wales is seeing the largest annual price growth nationally, while London rents continue their record-breaking surge.”
“Annual house price inflation, measured using final transaction prices, slowed in July, with negative annual inflation in the South West and London.”
Private rental prices increased by 5.4 per cent in England, 6.5 per cent in Wales, and 6 per cent in Scotland in the year to August. Within England, London saw the highest rise, 5.9 per cent.
The Royal Institution of Chartered Surveyors (Rics) said tenant demand was increasing with all regions and nations of the UK were registering growing demand for rented accommodation in recent months.
It also reported a decline in landlords looking for tenants. With rising demand and declining supply, Rics warned rental prices are expected to increase over the next three months.
Nathan Emerson, of Propertymark, which represents estate agents, said: “The growing disparity in the number of homes available to rent when compared with increased demand from prospective tenants is alarming and continues to widen from already worrying levels which is putting pressure on rents.
“In turn, more and more tenants are falling into arrears as affordability worsens.”
He argued that financial and regulatory pressure on landlords meant they had “little reason to stay or invest in the market”, adding: “Governments across the UK need to urgently address the underpinning reason for these issues, which is undersupply, and must now look to adequately incentivise the provision of desperately needed homes in the private rented sector.”
Marc von Grundherr of estate agents Benham and Reeves said: “Much has been made about the decline of the property market, but the truth of the matter is that house prices continue to sit at their highest levels this side of the millennium and only marginally off the market peak seen towards the back end of last year.
“There are sure signs that stability is returning to the London market, with the capital seeing one of the strongest rates of monthly house price growth. Mortgage affordability remains an issue for many buyers.
“However, those looking to sell should rest assured that their home will still command a solid good price in the current market, whether that be in London or any other area of the nation.”
James Forrester of Barrows and Forrester, said the house market was cooling down but in view of recent economic turblence the figures could be viewed as “extremely positive.”
He added: “The true test of the property market is how sold prices are performing and, as it stands, we’re yet to see any notable dip in this respect. Certainly not the 30 per cent crashes predicted by some industry ‘experts’.”
Chris Hodgkinson of House Buyer Bureau said the property market had become an “increasingly difficult place for buyers” in recent months and this was causing house price growth to slow. “Given the lagged nature of house price reporting a reduction could well be on the cards, however, a return to normality is no reason to run for the hills in anticipation of a market crash,” he said.
