Average rents continue to rise across the UK
In the fallout from the Bank of England’s base rate rising far above the waterline at 3%, mortgage rates and rents continue to rise in line with inflation, and the domino effect of the economic climate becomes ever more apparent in today’s housing market.
Data from the Office for National Statistics (ONS) found that private rent paid by tenants in the UK increased by 3.8% over the year to October 2022. *
The latest Index of Private Housing Rental Prices from the ONS also showed that annual rental growth was slightly higher in October compared with the 3.7% recorded in September. The new figure is the largest annual percentage change seen since the data series began in January 2016, which proves that rental prices are growing rapidly in the current economic climate. *
Annual private rental prices were found to have increased by 3.7% in England, 3.2% in Wales, and 4.2% in Scotland in the 12 months leading up to October of this year.*
Regionally, the highest annual percentage change in private rental prices was found in the East Midlands at 4.8%, while London saw the lowest at a notable 3%. *
The data also found that the annual percentage change of private rental prices remained steady between November 2019 and the end of 2020. Rental price percentage changes slowed in early 2021 and gained momentum later that year. Private rental prices have increased across all regions in 2022, including in London. *
Additionally, The Association of Residential Letting Agents (ARLA) outlined in their Housing Insight Report from September 2022 that the demand for properties is continuing on a rising incline, which is hiking up prices. According to ARLA, the supply of available houses to rent has reportedly not risen in the last four months. **
The Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey also reported that tenant demand remained steadfast throughout October, with tenant enquiries on the rise across the UK. ***
While the ONS figures are telling, the report made sure to note that these supply and demand pressures can often take time to feed through to the Index of Private Housing Rental Prices, which reflects price changes for all private rental properties rather than only newly advertised homes to rent.*
Supply and demand
The underlying issue has remained consistent over the past year, with a continued trend of landlords leaving the market and prices rising due to a shortage of rental supply. The disparity between supply and demand has only accelerated in the midst of the cost-of-living crisis. It’s understandable that in the thick of rising interest rates, potential first-time buyers may be more inclined to put their plans on hold for the time being and opt for renting instead.
The unmanageable rates of demand are likely to see prices continue to grow into 2023, with a lack of properties to meet the current competition in the market and too many landlords abandoning the market at a pivotal moment.
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Office for National Statistics – Index of Private Housing Rental Prices *
The Association of Residential Letting Agents – Housing Insight Report September 2022 **
The Royal Institution of Chartered Surveyors – UK Residential Market Survey ***
This article was originally published by BriefYourMarket and is reproduced here with their permission.
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