The Office for National Statistics (ONS) reports that average UK private rents increased by 8.7% in the 12 months to May 2024, down from 8.9% in the 12 months to April 2024. This slight decrease indicates that while prices are still rising, the rate of increase has slowed.
Average rents increased to £1,301 (8.6%) in England, £736 (8.5%) in Wales, and £957 (9.3%) in Scotland in the 12 months to May 2024. In Northern Ireland, average rents increased by 10.3% in the 12 months to March 2024.
In England, rent inflation was highest in London at 10.1% and lowest in the North East at 6.1% in the 12 months to May 2024. Across Great Britain, the average rent was highest in Kensington and Chelsea at £3,397 and lowest in Dumfries and Galloway at £480.
The ONS also noted that average UK house prices increased by 1.1% in the 12 months to April 2024, up from 0.9% in the 12 months to March 2024. This marks the second consecutive month of annual house price increases following eight months of annual declines.
In the 12 months to April 2024, average house prices increased in England to £298,000 (0.6%), in Wales to £208,000 (0.4%), and in Scotland to £190,000 (4.5%). In Northern Ireland, average house prices increased by 4.0% to £178,000 in the year to Quarter 1 (Jan to Mar) 2024.
Reaction
Emma Cox, MD of real estate at Shawbrook:
“April house price data confirms the positive trend we’ve observed throughout 2024. This sustained growth is encouraging, indicating a cautious return of confidence in the market, despite the absence of an anticipated near-term base rate cut.
“Professional landlords will be hoping for some stability post-election both economically and politically to support them in their portfolio management. A consistent economy brings consistent property valuations which in turn helps landlords plan for growth and bring that much needed supply of rental properties to the market.”
Nathan Emerson CEO of Propertymark:
“Since the start of the year, we have seen healthy progress within the housing sector, with consumers finding a sensible balance of affordability and market confidence. With the tide now decisively turning regarding inflation, the attention is now firmly focused on when the Bank of England feels confident enough to start lowering the base rate. Once this journey starts to happen and when the political landscape simmers down following the general election, we should see a stable market for the foreseeable future.”
Richard Harrison, head of mortgages at Atom bank:
“House prices have risen for two months in a row now, a clear symptom of improved levels of optimism among buyers. Would-be purchasers are feeling more confident about pushing on with transactions, however this morning’s inflation news has seemingly dampened economists expectations around any imminent cut to base rate, which will clearly impact mortgage rates.
“While there are mixed messages around the immediate prospects of the market, estate agents are reporting significant jumps in the number of prospective buyers registering with them, at a faster rate than increases in supply, and that is driving prices higher. That is feeding through into increased activity levels, with estate agents seeing the number of agreed sales improve to the highest level in two years.
“Crucially, the increased demand is coming from a broad range of would-be buyers, including those classed as ‘near prime’. While the headline inflation rate has fallen, we are only likely to see growing numbers of potential purchasers fall into this category, given the rising costs we have all faced, and if they are to enjoy a path to homeownership then it is vital lenders take a more accommodating approach.”
Sara Palmer, distribution director at TML:
“A second consecutive month of house price growth will prompt hopes that demand in the property market is tentatively back, after a period of volatility. With the rate of inflation decreasing, many prospective buyers will likely be growing in confidence and prepared to make their next move in the coming months. Despite the UK election standing ahead of a potential interest rate cut, scores of buyers are taking the plunge to buy anyway with many accustomedto the higher mortgage rates on offer.
“For those considering buying in the coming months, speaking to a broker will ensure they are ‘mortgage ready’ when the time comes.”
Richard Rowntree, managing director for mortgages at Paragon Bank:
“It is encouraging to see a reduction in rental inflation, which we believe will be driven by lower inflation on new lets. In order for this trend to continue, something that helps to alleviate the affordability challenges faced by tenants, it is crucial that we address the imbalance between the demand and supply of rented homes.
“To do this we need to recognise the contribution of private rented sector landlords and be proactive in creating the conditions that facilitate investment in good quality housing.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Today’s announcement of a fall in inflation growth and previous drops appear to have already been factored into the expectations of many homebuyers.
“A cut in base rate had also been anticipated but now there is widespread acceptance that mortgage costs will stay higher for longer.
“Although this ONS data is the most comprehensive of all the housing market price indicators, it does reflect activity when optimism was greater prior to the election announcement. That news made our buyers and sellers a little more cautious so viewings since are lower and prices softening. On the other hand we are seeing no significant withdrawals or renegotiations.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi:
“House prices have increased in nominal terms by 1.1% in the year to April, to £281,000. However, for most younger people, this is irrelevant. Half the UK population are under 40, and for most of these, the important question is not ‘how fast are house prices increasing?’ The question is ‘can I afford to live in a decent home?’ And the answer for most is related more to regulation than to house prices.
“Regulations intended to help tenants have adverse consequences. The planned end to ‘no fault’ evictions was intended to protect the right of tenants. In fact this is one of the causes of rising evictions. Landlords, who fear they won’t be able to access their property, are evicting tenants while they can, meaning the number of under-used and empty homes is growing well over the 1 million recorded by the census in 2021, and tenants are losing their homes.
“Nothing is replacing this supply, because building new homes is slow, and potential investors are nervous about the future of housing policy under the next government.
“We have to hope that the next government can allay these fears and provide a stable environment for responsible, professional investors to provide safe, secure homes for renters, before the supply of decent, safe homes for the younger generations dries up.”
Arjan Verbeek, CEO of Perenna:
“Rising house prices continue to pose a major obstacle for aspiring homeowners. They are also only one of several factors affecting an individual’s ability to step onto the ladder. If we don’t address all these factors, we will have a generation of people locked out of homeownership.
“Making home ownership accessible requires structural reform. There are three simple, pragmatic steps a new government can take to reform our mortgage market so it better serves borrowers and addresses the chronic homeownership crisis. Embrace longer-term fixed mortgages; adopt a Netherlands’ style mortgage guarantee scheme; and exempt long-term fixed rate mortgages from the loan-to-income limit. If we can follow through with these simple changes we can create a homeownership revolution right here in the UK.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“Modest but healthy levels of growth seem to be the picture of house prices currently, bringing some much-needed stability to the property market.
“This period of calm is an opportunity for both buyers and sellers alike. Sellers can benefit from continued strong buyer demand, while a more balanced market may offer better value for buyers, particularly those looking to own their first home.
“There are clear differences on a regional basis, with areas like the North West seeing strong growth of nearly 4%, compared with London’s decrease by a similar amount.
“While mortgage approvals dipped slightly in April, the overall number of transactions remains higher year-on-year, suggesting a market with continued momentum.
“The next government needs to work together with industry stakeholders to address the ongoing challenges facing the industry. Policies that increase housing supply, enhance affordability, and promote transparency will benefit buyers, sellers and estate agents.
“The Guild remains cautiously optimistic about the outlook of the housing market for the remainder of the year. Strong buyer demand, alongside a slowdown in house price volatility, will help to keep the industry seeing robust growth.”
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Average house prices hit an eye-watering £326,248 in April, reflecting the fact that when many of these sales were agreed in January, mortgage rates were falling and buyers were flocking back to the market. It’s good news for potential downsizers and homeowners with relatively low levels of equity in the property, who’ll see that equity grow. However, it piles even more pressure on first-time buyers and those hoping to climb the property ladder, who could see their property dreams retreating even further over the horizon.
“It demonstrates why so many political parties included first-time buyers in their manifestos. Both Labour and the Conservatives hope that building more properties will ease the pressure – with Labour pledging 1.5 million more homes and the Conservatives 1.6 million. Labour is specifically focusing on building more affordable housing, prioritising first-time buyers, and reforming planning to speed things up. Both parties have pledged a permanent mortgage guarantee scheme, to help buyers with smaller deposits secure a mortgage.
“However, the Conservatives have gone further. They’ve suggested cutting stamp duty on homes costing up to £425,000 for first-time buyers – which would make the current stamp duty holiday a permanent fixture. They’ve also proposed a temporary two-year capital gains tax holiday for landlords who sell to tenants. And they’ve suggested introducing a new Help-to-Buy equity loan scheme – offering up to 20% towards the cost of a new-build. This scheme sounds like a boon for first-time buyers, but when you consider that rising new build prices are vastly outstripping those of existing homes, it raises the risk that a new scheme could add fuel to the fire.”
Karen Noye, mortgage expert at Quilter:
“According to the most recent Government House Price Index UK, house prices increased 1.1% in the 12 months to April 2024, up from an increase of 0.9% in the 12 months to March 2024. The average UK house price now stands at £281,000 in April 2024 which is £3,000 higher than 12 months ago.
“The housing market remains anything but predictable amid challenging economic conditions. Whether the news this morning that inflation has returned to the Bank of England’s target of 2% will help steady the housing market is yet to be seen.
“It’s important to remember that lower inflation does not mean that prices have dropped; they are simply rising at a slower rate, and people are still being battered by high mortgage rates coupled with high living costs. This has served to temper any significant house price rises, as people are less likely to offer above asking prices given how stretched they are. To add to this, mortgage rates have been volatile, often pulling the rug from under buyers’ feet as they come to make an offer due to a sudden increase in the cost of servicing the mortgage.
“If we get the sense from tomorrow’s Bank of England interest rate decision that a base rate cut is still a while off, it is unlikely that house prices are going to significantly inflate any time soon. However, once rates are cut and mortgage rates do come down as a result, we may find that pent-up demand from people waiting for this moment exerts upward pressure on house prices.
“The next government will want a vibrant housing market but not one where prices continue to outstrip wages. Pledges to build a significant number of new homes by Labour would help to add housing stock to a market suffering from a severe lack of it. Without the building of a significant number of new homes, the laws of supply and demand mean house prices will continue on their upward trajectory, making the dream of homeownership a constantly moving target for millions of young people in this country.”
Tomer Aboody, director of property lender MT Finance:
“Whereas we haven’t as yet hit the dizzy heights of the post-Covid era where houses were flying off the shelves due to stamp duty reforms, families needing more space and rock-bottom interest rates, we are seeing steady growth in values which illustrates confidence has returned to the market.
“Volumes are significantly lower than last year, but again, on a positive upwards cycle. There’s never been a better time to reform stamp duty but sadly a likely incoming Labour government doesn’t appear supportive of this.
“Hopefully some interest rate cuts in the very near future will help push the market on even more.”
Mobeen Akram, new homes director, Mortgage Advice Bureau:
“With inflation having dropped to 2%, it’s clear that the market is becoming more stable and positive. In line with this, the new homes market continues to play on some interesting contradictions.
“While some indicators suggest a slowdown, others point to a market with a strong set of underlying fundamentals – perhaps destined to be reinforced with the upcoming summer figures and governmental changes.
“This month, we’ve seen a monthly average increase in property prices to £281,000, including an increase to £ 393,888 for new builds. Coupled with an annual price change of 1.1%, and 9.6%for new builds respectively, it’s clear that despite contradictory figures, it’s still very much a time for homebuyers to take advantage of the current market and competitive deals available.
“Although we’re still very much in a wait-and-see phase, now is not the time to be sitting on our hands. There’s plenty we can do to ensure that the rest of 2024 lays the foundations for a strong 2025.”
