UK rents surge and house prices rise – ONS

The average private rent in the UK surged by 8.6% in the 12 months to July 2024 and house prices rose by 2.7%, to £288,000, the Office for National Statistics (ONS) reveals.

Its latest rent and house price index shows that there’s no change from June’s rent rise which remains below the peak of 9.1% seen in March.

England saw the highest rent increases with average rents reaching £1,319 in July, a £104 increase year-on-year.

Wales experienced a slightly slower rent rise, with average rents climbing 7.9% to £748.

This represents a slowdown from the 8.2% increase recorded in June, while Scotland also saw a cooling in rental inflation, with average rents up 8.2% to £965 – down from the 8.4% growth seen in June.

Northern Ireland saw a rent increase of 10.0%, marking a slowdown from April’s 10.3% and the peak of 10.4% in February.

Regional disparities are evident, with London leading the charge in rent inflation at 9.7%.

However, the North East recorded the lowest growth at 6.1%.

UK house prices climbed by 2.7%

The ONS is also reporting that average UK house prices climbed by 2.7% to £288,000 in the 12 months to June.

England, Wales and Scotland all witnessed house price growth during this period, with increases of 2.4%, 1.8% and 4.3% respectively.

However, the pace of growth slowed compared to previous months in both England and Wales.

Northern Ireland saw a more robust increase, with average house prices rising by 6.4% to £185,000 in the second quarter of 2024.

Property sector reaction to the latest rent rise

• Nathan Emerson, the chief executive at Propertymark, said: “The rental market continues to feel the harsh reality of ongoing pressures on housing demand, which are outstripping current supply. This has a real-world effect on rental prices for consumers and that consequence is prices tend to be pushed further upwards. It is crucial the mismatch between supply and demand is addressed as a priority to help ease a current ‘nine applications per available property’ trend that we are witnessing. It’s an unhealthy situation and one that can only be solved by ensuring long term investment in a diverse mix of sustainable housing to keep pace with growing demand.”
• Tom Bill, the head of UK residential research at Knight Frank, said: “Rental value growth remains high by historical standards after a number of landlords sold up in recent years due to a proliferation of red tape and tax. Just as there are signs that supply is recovering and the upwards pressure on rents is easing, there is renewed uncertainty surrounding further legislative changes by the new government. If any new rules are too punitive for landlords, it could push rents higher as more sell up.”
• Ben Twomey, the chief executive of Generation Rent, said: “While most of the country breathes a sigh of relief over falling inflation, soaring rents mean the single biggest cost for tenants continues to go up much faster than our incomes. Landlords can raise the rent as high as they can get away with while using the threat of a no-fault eviction to bully their tenants to into accepting it. These figures show that it works for them, with renters being forced into poverty and homelessness as a result.”
• Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “Rental misery is piling on the pressure for another month, with rents up an eye-watering 8.6%. It’s not quite as bad as the record high back in March, of 9.2%, but that’s like consoling someone who has just broken a leg by telling them it’s not as bad as breaking two. Landlords continue to sell up in the face of higher mortgage costs, tougher tax rules and the likelihood of more stringent legislation. Meanwhile, growing tenant numbers make it harder to get hold of a property, even if you’re prepared to pay sky-high prices. It’s difficult to see how things will ever get any better.”

Property sector reaction to the latest house price rise

• Director of Benham and Reeves, Marc von Grundherr, said: “Five consecutive months of positive monthly house price growth demonstrates that the UK property market is very much bouncing back from the period of stagnation caused by higher mortgage rates. Buyers are acting with greater confidence and this confidence will only grow all the stronger now that interest rates are starting to fall and so we expect to see a very strong end to the year, both in terms of buyer activity levels and the resulting boost to property values.”
• Emma Cox, the managing director of Real Estate at Shawbrook, said: “The increase in house prices will be welcome news in the professional buy to let market. Landlords are showing optimism for the remainder of the year, bolstered by the recent base rate cut. This move has reassured property investors, instilling confidence in the long-term economic outlook and encouraging further market activity. Additionally, the government’s renewed focus on revitalising the construction sector — through ambitious housebuilding targets and more efficient planning processes — should help to boost the supply of high-quality rental stock, which is a positive development for the market.”
• Sarah Coles, the head of personal finance at Hargreaves Lansdown, said: “We haven’t seen much movement in house prices in recent months, reflecting the fact that demand and sales have been a bit choppy so far in 2024. We were back into tentatively positive territory again in July, with more buyers tempted back to the market by the prospect of interest rate cuts, and we could see more of the same over the rest of the summer. We’re not going to see a massive influx of buyers, because although mortgage rates have drifted south, they’re still relatively high.”
• Tom Bill, the head of UK residential research at Knight Frank, said: “It has been a sluggish two years for the UK housing market as interest rates returned to normality, but August may prove to be a turning point. The first rate cut in more than four years and lower-than-expected inflation numbers should boost demand this autumn and we expect average prices to rise by 3% in 2024.”
• Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Here’s another example of the housing market’s resilience – very little change in prices at a time of considerable election and interest rate uncertainty. Activity has improved since, helped by the long-awaited cut in base rate although already taken into account by many. The slight uplift in the latest inflation figures is unlikely to knock the interest rate reduction strategy off course but will have some impact on confidence as it is likely that the pace may slow a little, leaving the market to find a new level.”
• Tomer Aboody, director of specialist lender MT Finance, said: “There is plenty of evidence of confidence returning to the market, as mortgage providers follow the Bank of England rate cut and offer more flexible mortgages. An uptick in activity is also clear, although it is still significantly down on previous years so a push will be needed. We wait to see whether the government will assist first-time buyers in the autumn Budget. But encouragement in some form, both from the government and mortgage providers, is needed to fuel transactions and activity.”

Share This Article