Wales and Scotland have seen even higher percentage rents rise. The rents rise is particularly impactful on people’s budgets since housing expenses typically constitute their largest monthly expenditure.
Rents rise in the UK have experienced a significant surge, with the Office for National Statistics (ONS) reporting a 5.1% overall increase
In contrast, property prices have been rising at a slower pace, primarily due to higher mortgage rates that limit affordability for potential home-buyers. In the 12 months leading to May, UK house prices edged up by 1.9%, a notable decline from the 3.2% rents rise increase recorded in the previous year up to April. Aimee North, head of housing market indices at the ONS, pointed out that while UK house prices remain higher than the previous year, they are now £7,000 below the peak reached in September 2022.
The rents rise in prices is particularly noteworthy, as the ONS highlighted it as the highest annual inflation recorded since 2016. Specifically, Wales experienced a 5.8% increase in rental costs, followed closely by Scotland at 5.5%, and England at 5.1% in the 12 months leading to June. Among English regions, the West Midlands saw the highest rise at 5.4%, while the North East had a more moderate increase at 4.4%. Meanwhile, London rents went up by 5.3%.
The latest housing statistics come amid a backdrop of easing inflation, where the rate rose by 7.9% in the year to June, down from 8.7% in May. However, the continuous series of interest rate hikes over the last 18 months has led to higher mortgage rates for both homeowners and landlords. As a result, rents rise has become inevitable, given that landlords can no longer absorb these increases, resulting in them being passed on to tenants.
Property brokers have also pointed to a scarcity of available properties, leading to rental demand surpassing supply
Consequently, tenants are facing rents rise prices, making it difficult for them to secure affordable housing.
In contrast to the rent rise prices, property values have seen slower growth, with only a 1.9% increase in the year up to May. England’s average house price grew by 1.7% to £304,000, Wales rose by 1.8% to £213,000, Scotland experienced a 3.2% increase to £193,000, and Northern Ireland saw a 5% rise to £172,000.
Despite a forecasted “peak-to-trough” drop in house prices of around 10%, experts believe that even with such a decline, prices will still remain approximately 15% higher than pre-Covid levels.
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