Record Rent Rises Propel Housing Market Despite Uncertain Economic Landscape

Recent data released by the Office for National Statistics (ONS) indicates a complex scenario unfolding in the UK housing market, with record rent increases contributing to a boost in buyer numbers and influencing house prices, amidst ongoing economic challenges and policy adjustments.

Intensified Pressure on Renters
Sarah Coles, head of personal finance at Hargreaves Lansdown, highlighted the unprecedented rise in UK private rents, which have surged by 9.2% over the past year, marking the highest increase since records began in 2015. “There’s no let-up in the squeeze on renters, as rents were up 9.2% in a year – a record since the data was first collected,” Coles noted. She elaborated on the difficulties facing tenants, particularly due to a decreasing number of landlords and increasing regulations which, while designed to protect renters, have led to reduced housing availability and pushed rents higher. The financial strain is significant, with renters left with an average of just £193 at month’s end, and fewer than half possessing adequate emergency savings.

Gradual Recovery in Property Prices
The property market is showing signs of recovery, with average house prices in the UK slightly increasing by 0.4% over the past month, despite a slight annual decrease of 0.2%. The average house price currently stands at £281,000, with new-build prices witnessing a substantial rise of 16.4% over the past year. Ed Phillips, CEO of Lomond, observed, “So while further monthly growth suggests that we’re heading in the right direction, it may be a few months more before returning buyer activity tips the annual rate of sold price growth into positive territory.”

Optimism Among Market Analysts
Nathan Emerson, CEO of Propertymark, expressed optimism about the property market’s resilience and the signs of a stabilising economy, noting, “A month on month growth in house prices is a sign of prosperous green shoots on the run up to spring, which is historic for its higher demand from buyers and sellers.” Similarly, Steve Griffiths, Chief Commercial Officer at The Mortgage Lender, mentioned, “With month on month house prices ticking slightly up, it appears as though some optimism returned to the property market following an unsettling year.” He also pointed out the potential for increased market activity due to expected base rate cuts in the upcoming months.

The sentiments shared by industry leaders suggest cautious optimism for the UK housing market as it navigates through inflationary pressures, fluctuating mortgage rates, and broader economic challenges. The role of high rental costs in driving potential buyers towards purchasing homes is particularly notable, emphasising the interconnected nature of the rental and buyer markets.