Average private rents increased by 8.6% in the 12 months to June 2024, data from the Office for National Statistics (ONS) has revealed.
This was down from 8.7% in the 12 months to May 2024, and below the record-high annual rise of 9.2% in March 2024.
Average rents increased to £1,310 (8.6%) in England, £743 (8.2%) in Wales, and £959 (8.4%) in Scotland, in the 12 months to June 2024.
In Northern Ireland, average rents increased by 10.3% in the 12 months to April 2024.
In England, rents inflation was highest in London (9.7%) and lowest in the North East (5.9%), in the 12 months to June 2024.
Average house prices increased by 2.2%, to £285,000 in the 12 months to May 2024 (provisional estimate), up from 1.3% (revised estimate) in the 12 months to April 2024.
Average house prices increased in England to £302,000 (2.2%), in Wales to £216,000 (2.4%), and in Scotland to £191,000 (2.5%), in the 12 months to May 2024.
Reaction:
Ben Waugh, managing director at more2life:
“The uptick in house prices speaks to a market that is gaining momentum and poised to grow even stronger as we progress through the second half of the year.
“Concerns that political change might dent the recovery have been put at ease, with the new Government marking its intentions to prioritise a robust property market from the outset.
“Healthy demand for housing and overall market confidence bodes well as we await the Bank of England’s decision on its central rate in early August.
“Homeowners looking to put their houses on the market will be encouraged by these raising figures and advisers are in an important position to provide expert guidance at this time as more buy and sell activity picks up.”
Sam Reynolds, CEO of Zero Deposit:
“Much of the noise leading up to the election was predictably focused on the housing market, however, with rents continuing to climb, it’s imperative our new Government gives the current rental crisis the focus it deserves.
“Today’s figures give a sense of the task ahead of the Labour Government.
“We need more rental homes and ultimately, it is what they’ll be judged on as the single most important initiative to solve the demand-supply imbalance and the considerable rental cost inflation.
“There are other welcome, progressive changes that give fair protection to tenants and genuine stimulus for landlords to engage in the sector with ambition – but fundamentally, we need more rental properties to control spiralling costs.”
Dalian Gill, co-founder and director at Fairbridge Capital:
“Today’s figures are a reflection of the positive sentiment in the market as buyers and investors resume their property searches following the election earlier this month.
“Falling mortgage rates, in anticipation of a base rate reduction, and firm commitments from the new Government on housebuilding targets are also stimulating demand and fuelling optimism about the remainder of the year.
“In other good news for property investors, annual rental growth is sitting at around 6%, well above the 2.5% growth rate pre-Covid.
“For investors and homebuyers looking to take advantage of the positive outlook, timing is paramount.
“Quick access to financing can help buyers capitalise on opportunities as and when they come up, without being held back by lengthy mortgage approvals.
“Bridging loans should be a solution in every broker’s toolkit to give their clients flexibility when they most need it.”
Paul Glynn, CEO at Air:
“After three consecutive months of house price growth, there is no doubt that the UK property market has settled into a stable holding pattern.
“The turbulence of 2023 is finally in the rear-view mirror and the market temperature is heating up.
“With a new Government in office and a potential interest rate cut on the horizon, scores of buyers may feel empowered to brave higher mortgage rates to secure their dream home.
“Nevertheless, the unavoidable truth is those buyers who do step onto the ladder will likely carry their mortgage repayments into retirement.
“The later-life market is splitting into two categories: the traditional equity release market, and the new generation who may lean on specialist lifetime mortgage products to reduce their interest burden in their autumn years.
“In the future, the homeowning journey may last a lifetime, so advisers must be on hand to ensure buyers can benefit from a smooth continuum of lending.”
Karen Noye, mortgage expert at Quilter:
“Average UK house price annual inflation was 2.2% in the 12 months to May 2024 according to the latest Government house price index.
“The average UK house price was £285,000 in May 2024 which is £6,000 higher than 12 months ago.
“With the economic news flow now proving to be much more positive, this is feeding through to buyer sentiment and causing house prices to rise.
“Given inflation is now much more under control than it has been, mortgage rates have settled somewhat too giving buyers more certainty over costs and which gives buyers more confidence to bid above asking prices, pushing prices up.
“High interest rates alongside ongoing cost of living pressures have put the brakes on a more significant rise in house prices up until now.
“Both sellers and buyers have been reticent to make a move but under these improving picture there may be a release of pent-up demand over the next few months further buoying prices.
“The new Labour Government is set to enact a slew of new planning rule changes to help it achieve its lofty housebuilding targets.
“However, this is a long-term measure and will only feed through to stabilising house prices in the medium to long term.
“So first-time buyers will unfortunately still continue to suffer with affordability challenges for a long time yet.
“We should also not expect there to be a return to the ultra-low interest rate levels that we have witnessed pre and during the pandemic.
“Where the natural level of interest levels ends up landing after a rate cutting cycle is still guesswork.
“However, it is very unlikely rates will reach the ultra-low levels many people got used to.”
Nathan Emerson, CEO of Propertymark:
“It is fantastic to see that the General Election did not disrupt the housing sector greatly, and despite many challenges, the market still delivered growth.
“Propertymark remains keen to learn more on how the supply of 1.5m new homes across this parliamentary term will be delivered, along with what support may be offered to first time buyers.
“Homeownership must always remain a realistic and workable proposition for those who choose it.
“Across the coming weeks, we hope to see a dip in interest rates too, and for this to translate into lenders offering a raft of targeted mortgage deals.
“There has been much insecurity across the rental market over recent years due to aspects such as uncertainty surrounding the Renters’ Reform Bill, increases in taxes, and a lack of clarity regarding regulation.
“In real terms, this anxiety has impacted new investment and, in extreme cases, has even prompted landlords to leave the sector, further compounding the issue surrounding available housing stock.
“The rental sector urgently needs investment to keep pace with demand, and Propertymark is keen to see the UK Government closely review all elements and generate new legislation that promotes investment, but above all, provides full fairness to both landlords and tenants alike.”
Nicky Stevenson, managing director at Fine & Country:
“House prices defied predictions with a stronger-than-expected performance in May as the economic tide continues to turn.
“The property market is gearing up for a summer boost, driven by May’s economic rebound and stable inflation rates.
“After April’s stagnant figures, this recovery marks a promising shift in the real estate landscape.
“These positive indicators could allow the Bank of England to lower the base rate this summer.
“This adjustment would make mortgages more affordable and accessible, opening doors for many, especially first-time buyers.
“Meanwhile, we’re already seeing increased activity, with HMRC figures showing a 17% rise in transactions compared to last year.
“This uptick reflects easing financial pressures amid the improving economic climate.
“May’s economic strengthening was bolstered by a rise in construction, which grew at its fastest rate in nearly a year.
“The surge in house-building and infrastructure projects is set to boost the supply of homes, helping to balance rising demand.
“As we move further into summer, these factors paint a picture of a robust and dynamic property market, poised for growth and supported by increased supply and improving affordability.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“Another solid month of growth in house prices is great news for sellers during the summer months when footfall at estate agents is at its highest.
“Modest levels of annual growth in London and the South East are not surprising, considering prices have been overinflated in the region for many years.
“The latest transactions data shows a fifth consecutive increase in sales, meaning that more people are getting on the property ladder.
“This can only be good news for buyers and sellers alike, with sellers in particular not being forced to reduce their asking price so significantly.
“The political upheaval has settled, and the new government is getting its feet under the table.
“We have already seen a renewed commitment to house building which will go a long way towards filling the gaps in areas with a shortage of available homes.
“The key to allowing first-time buyers to make the most of new homes is ensuring that they are affordable and competitively priced for the area.
“The next barrier that needs to be tackled is the availability of mortgage deals and how easy it is for households to make their repayments.
“With inflation coming down within target levels and economists hopeful for inflation on core services to fall too, we should see the Bank of England lower interest rates in the coming months.
“This should be the shot in the arm that lenders need to ramp up better fixed-rate mortgage offers.”
Jonathan Hopper, CEO of Garrington Property Finders:
“Today’s data confirms the upward momentum is a bounce not a blip.
“Not only is the national pace of price growth accelerating, but average prices are once again rising in every single region of the UK.
“The turnaround has been particularly strong in London. As recently as April, average prices were still falling sharply in the capital, but today’s data confirms they crept back into growth during the 12 months to May.
“Yet huge regional disparities remain, with the least affordable areas seeing very modest price rises as high interest rates force buyers to be intensely price sensitive and picky.
“Even in traditionally prime areas, only the very best properties are achieving full asking prices.
“Nevertheless the progress is welcome and alongside the steady rise in national prices, transactions are stabilising nicely.
“The number of homes changing hands in May was up nearly a fifth compared to the same month last year, and up 2.4% compared to April.
“The surge in the number of properties put on the market during the first half of the year means that would-be buyers who put their house hunting on pause during the uncertainty of the election are returning to a market with plenty of homes to choose from.
“While the jury is still out on whether today’s consumer inflation figure will be enough to persuade the Bank of England to start cutting interest rates in a fortnight’s time, some mortgage lenders are already starting to trim their rates in anticipation.
“The combination of more affordable borrowing and improving sentiment should be enough to keep the momentum going in coming months.”
