As the cost of rent soars to record levels
The Office for National Statistics (ONS) has reported that UK house prices have remained "little changed" compared to the previous year. However, rents continue to rise to unprecedented levels. You can find more details here.
In August 2023, the average UK house price was £291,000, only a slight variation from the preceding year but £9,000 higher than the low point in March 2023, as stated by the ONS.
Aimee North, the head of housing market indices at ONS, commented on the situation, saying, "UK average house prices have seen minimal fluctuations from the previous year, but we observe rising annual inflation, especially in Scotland."
North added, "Over the year leading to August, the North East experienced the fastest growth in average house prices, whereas southern and eastern England saw a decline."
In a simultaneous announcement, the ONS reported that UK inflation remained at 6.7% the previous month. This was attributed to higher fuel prices for motorists, which offset the easing price increases in food and beverages. This pause in inflation comes after three consecutive months of relief for household budgets.
The Bank of England has responded to inflation by implementing base rate hikes, causing an increase in costs for mortgage holders. Additionally, reports indicate that a shortage of rental properties is contributing to the rising rental prices.
In August 2023, on a seasonally adjusted basis, the average UK house price increased by 0.2%, following a 0.3% decrease in July 2023.
The average house price in England remained unchanged (0.0%) year-on-year in August 2023, with the typical home now costing £310,000, an increase of £9,000 since the low point in March.
In Scotland, house prices grew by 1.1% annually in August 2023, with an average price of £194,000, which is £13,000 higher than the low point in February.
Wales, on the other hand, experienced a 0.1% decline in house prices over the year to August, marking the first yearly fall in the average house price since April 2020. The average house price in Wales in August 2023 was £217,000, which is £8,000 higher than the recent low point in April.
Northern Ireland saw a 2.7% increase in the average house price over the year, reaching £174,000.
Regionally within England, the North East boasted the highest annual house price inflation in August, with average prices rising by 3.6% year-on-year.
In contrast, the East of England recorded the lowest annual house price inflation, with average prices declining by 1.6% in the 12 months leading to August.
House prices in London fell by 1.4% annually.
A separate ONS report revealed that private rental prices paid by tenants in the UK rose by 5.7% in the 12 months up to September 2023. This marked the most significant annual change since comparable records began in January 2016.
The annual inflation rate of private rental prices in the UK started to rise in the second half of 2021, according to the ONS. In London, private rental prices increased by 6.2% in the year leading to September 2023, the highest annual increase since records began in January 2006.
OPINION: Home ownership is becoming increasingly unattainable for tenants, and many are finding their rental options in jeopardy.
The severe shortage of rental properties, noting, I have experienced two-bedroom properties attracting as many as 80 inquiries from desperate tenants, which is pushing renters to explore more affordable areas, impacting city centre rents.
The supply and demand balance continues to favour landlords, with limited rental properties available and high tenant demand and we are seeing an increase in instructions across our national network, as committed sellers remain eager to make their move, matching levels from a year ago.
Yes, there will be continued pressure on house prices as mortgage costs rise but demand strengthening in 2024 as economic sentiment improves, with modest single-digit annual growth expected from 2025.
We believe that easing mortgage rates, coupled with a more positive outlook for inflation, create room for the housing market to return to growth in the latter half of 2024.
People may well be adopting a wait-and-see approach, anticipating lower house prices and mortgage rates, but note that inflationary pressures may persist for a while.
The question is as an investor WHEN do you make that move into the property market to take advantage pre it's inevitable return of confidence?
I'd welcome any comments below or you could call us to discuss in more detail 0208 144 6222