Average private rents increased by 9.0% in the 12 months to December 2024, down from 9.1% in the 12 months to November, data from the Office for National Statistic’s (ONS) latest Price Index of Private Rents (PIPR) has revealed.
Average rents increased to £1,369 (9.2%) in England, £777 (8.5%) in Wales and £991 (6.9%) in Scotland, in the 12 months to December 2024.
Meanwhile, in Northern Ireland, average rents increased by 8.6% in the 12 months to October 2024.
In England, rents inflation was highest in London (11.5%) and lowest in Yorkshire and The Humber (5.4%).
In addition, average house prices increased by 3.3%, to £290,000, in the 12 months to November 2024 – this annual growth rate is up from 3.0% in the 12 months to October 2024.
Average house prices increased in England to £306,000 (3.0%), in Wales to £219,000 (3.0%) and in Scotland to £195,000 (4.7%), in the 12 months to November 2024.
Reaction:
Alex Upton, managing director – specialist mortgages and bridging finance at Hampshire Trust Bank:
“Rents are climbing fast, and there’s no sign of this slowing. The latest ONS data is yet another reminder of just how out of balance the rental market is.
Rightmove’s recent figures show that enquiries per rental listing are almost double what they were before the pandemic, while Propertymark’s Housing Insight Report highlights that letting agents now juggle around seven prospective tenants for every available property.
“With this ongoing disparity, 2025 looks set to be a record-breaking year for rents.
“For property investors, this surge in rental prices offers a real opportunity.
“Even with the higher Stamp Duty rates, focusing on projects that maximise rental yields, such as refurbishment or conversion schemes, could deliver significant returns.
“For lenders, staying flexible and offering tailored solutions will be key to supporting landlords with these more complex cases.
“With home ownership increasingly out of reach, a strong and stable rental market has never been more essential. But landlords will need the right support to deliver for tenants.”
Jason Tebb, president of OnTheMarket:
“This data is a little historic but shows house prices continued to rise on an annual basis in November, with the average property price £10,000 higher than a year ago.
“Two interest rate cuts in the second half of last year have had a positive knock-on effect on confidence, which the market relies so heavily on.
“With inflation dipping slightly to 2.5%, it is heading back in the right direction albeit slowly, but if this trend continues it will ease pressure on the Bank of England to delay further rate reductions.
“Affordability remains a challenge with a number of lenders raising rates in recent days on the back of higher swap rates but there has not been significant repricing.
“Sellers would be wise to take advice from their local agent and price sensibly if they want to successfully transact this year.”
Josh Skelding, commercial director at Fignum:
“Today’s data is an encouraging sign that the housing market is gaining momentum. Despite the typical seasonal slowdown at the end of last year, house prices have defied expectations.
“Buyers are racing to finalise deals before the April 2025 Stamp Duty threshold changes, hopefully prompting a surge in new year transactions.
“Although the Bank of England may lower borrowing costs more cautiously than previously anticipated, rates are still well below their peak last summer.
“The market is also benefitting from the effects of pent-up demand following the Autumn Budget, painting a positive picture for the market as it stands.
“That said, challenges remain that could dampen this progress. The recent sell-off in government bonds, triggered by inflation concerns, could see nearly 700,000 homeowners facing higher mortgage payments as their fixed-rate deals expire this year.
“Swap rates have risen sharply, adding to pricing pressures for lenders. While it’s unclear if these trends will persist, they are already impacting the broader lending environment.
“Affordability is another major concern, with borrowers potentially facing greater financial strain as businesses respond to the upcoming National Insurance increase by raising prices.
“In this environment, lenders have an important role to play in proactively supporting their customers.
“Adopting innovative technology, such as cloud-based solutions that enable tailored financial products, will be essential to meeting the evolving needs of today’s borrowers.”
Nathan Emerson, CEO at Propertymark:
“The lettings market has been an extremely challenging prospect for many across the last twelve months, and we have witnessed the average cost of renting a property across the UK increase by more than £100 per month for many.
“At the same time, we continue to witness an enormous mismatch between supply and demand of rental properties with an average of seven people chasing each potential property advertised.
“The UK Government needs to concentrate on supporting both tenants and landlords by boosting the supply of new rental homes as it proceeds with the Renters’ Rights Bill.
“There must be a fair and workable balance for all involved, and one that encourages long-term investment in the rental sector as the population quickly approaches 70m people, up from 65m only 10 years back.
“With many political and economic challenges currently dominating the news, the housing market has proven again that it can deliver growth despite the challenges faced.
“With keenness from many across England and Northern Ireland to complete before Stamp Duty increases take effect in April, it is imperative there is a strong sense of confidence for people to approach the market.
“Across the last quarter, our members have witnessed a positive uplift in the number of prospective buyers registering and an increase that represents a three-year high for the housing market.
“In addition, we have clarity that the Planning and Infrastructure Bill will be introduced to Parliament in March, which will empower the UK Government to make a start on their promise to deliver 1.5 million new homes before 2029.
“It does, however, remain imperative that there is clarity on where new homes will be built, together with how supporting infrastructure will be delivered.”
Verona Frankish, CEO of Yopa:
“The November figures show a marginal reduction in the monthly rate of house price growth, which is to be expected in the run up to Christmas.
“However, on an annual basis, house prices have continued to climb for the last eight months and it’s now full steam ahead where the property market is concerned, as homebuyers across England look to beat the stamp duty deadline.
“We’ve seen many times before how a sense of urgency drives demand across the market and the result of this heightened buyer activity is likely to be further house price growth over the coming months.”
Jonathan Samuels, CEO of Octane Capital:
“The property market continues to stand strong, but whilst inflation figures saw a surprise dip today, the outlook still remains somewhat uncertain and we simply haven’t seen interest rates fall as swiftly as expected over the last six months.
“In fact, mortgage rates remain higher than they were this time last year and so those looking to purchase are best advised to tread with a degree of caution and avoid the temptation to over borrow in hopes of beating the stamp duty deadline.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“The annual rate of house price growth was stronger than expected in November and there’s no doubt that the government’s decision not to extend current Stamp Duty relief thresholds is helping to drive this trend.
“We’ve seen previously how a stamp duty deadline induced surge in demand can drive market performance and the expectation is that we will see strong growth over the first three months of this year.
“Once the clock does expire on current relief thresholds there will almost certainly be a market correction, most likely in the form of reduced transaction numbers and weaker rates of house price growth.
“However, the industry-wide view is that the impact of this Stamp Duty deadline will be far more marginal compared to previous examples and so the consensus is that 2025 will be a year of overarching stability and positive growth.”
Marc von Grundherr, director of Benham and Reeves:
“The market is in fine health all things considered, with house prices showing upward growth on an annual basis for the eighth month in a row and there’s widespread positivity when it comes to the outlook for 2025.
“Even across London, where house price growth has been largely static, we’re seeing more interest from buyers, more offers made and more sales being agreed.
“However, it remains a challenging landscape for homebuyers who continue to face numerous obstacles, not least the high cost of borrowing, with mortgage rates still sitting substantially higher than we’ve become accustomed to in recent years.”
John Tilzey, sales director at finova:
“As the market steps into the near year, the temperature in the housing market is on the rise. In 2024, many aspiring homeowners held off from stepping onto the property ladder, citing an ongoing electoral cycle and an uncertain Autumn Budget.
“All of that pent-up demand was going to be released at some point, even though affordability still remains a challenge.
“The UK debt market sell-off could push up household borrowing costs, but there are other factors at play here; the Stamp Duty Tax Relief deadline is stoking demand and spurring homeowners on to complete their purchases.
“The base rate cuts last year have undoubtedly boosted confidence among first-time buyers, but it’s important to manage expectations about seeing considerably lower rates in 2025.
“Future rate cuts have been priced into the market, but prospective buyers should proceed with caution as there are a lot of different factors to contend with.
“In these market conditions, lenders and brokers must work together to provide borrowers with adequate support.
“We cannot lean on a ‘one-size-fits-all’ to meet borrowers’ rapidly changing demands in the new year.
“In 2025, it will be up to us all to provide bespoke support to buyers who are prepared to step onto the housing ladder, especially as pent-up demand finally flows into the housing market.”
Jonathan Handford, managing director at Fine & Country:
“House prices exceeded expectations in November, continuing their upward momentum despite the typically quieter market period and the ongoing economic challenges faced by buyers.
“With the Stamp Duty threshold set to decrease in April, some people sitting on a deposit will now move to secure deals before the deadline.
“This could spark an uptick in market activity, but recent house price data suggests this could be a short-term reaction rather than a sustained trend, as the market begins to stabilise.
“Despite last year’s Bank of England rate cuts, some lenders have been increasing mortgage rates in response to ongoing economic pressures. This could dampen some moving plans as buyers adjust their expectations to align with changing financial conditions.
“Today’s slight slowdown in inflation, currently at 2.5%, is a positive sign. But core inflation remains elevated at 3.2%, still above the Bank of England’s 2% target.
“The government must work to keep inflation in check, as sustained inflationary pressures could limit the scope for potential rate cuts later this year.
“However, there is still cautious optimism among experts for what the year has in store for the industry, with many hoping for another rate cut in the coming months.
“Such a move could provide a much-needed boost to the market and restore waning confidence.”
Malcolm Webb, risk director at Legal & General Surveying Services:
“It’s encouraging to see strong house prices at the end of 2024, which suggests that the property market is healthy.
“With the Stamp Duty thresholds set to be lowered in just over 10 weeks, we anticipate a wave of transactions as buyers try to take advantage of any savings under the current price bands.
“For anyone taking their next step in the mortgage market, it’s important to take your time and consult a professional adviser before making any concrete financial decisions.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The market felt fairly subdued towards the end of last year as one would expect as buyers and sellers tried to come to terms with the market realities of slower-than-previously-expected falls in borrowing costs.
“These figures are interesting as they cover not just mortgaged properties but the approximately third of transactions which are arranged without finance and show a considerable resilience despite the uncertainty prevailing at that time.
“Looking forward we are not seeing or likely to see any great changes in pricing or renegotiation but hopefully now with the slightly reduced inflation level, a cut in base rate will arise sooner rather than later.”
Tomer Aboody, director of specialist lender MT Finance:
“2024 saw a positive end to the year with more property transactions, along with an increase in pricing, illustrating how buyers and sellers were keen to take advantage of the lower rates on offer.
“As banks further reduced rates and affordability was more feasible, buyers wanted to act quickly amid concerns of a downturn in activity following the Chancellor’s Budget.
“As the new year gets underway, an imminent reduction in interest rates is looking less likely.
“We are therefore likely to see a big push in the first quarter as buyers take advantage of cheaper Stamp Duty and current lower rates, rather than put plans on hold yet again in the hope of further reductions.”
Richard Harrison, head of mortgages at Atom bank:
“Today’s surprise drop in inflation will be welcomed by borrowers who have their fingers crossed for a rate cut in February.
“Recent inflation figures have prompted the Bank of England to take a more cautious approach, but today’s news, coupled with a sluggish economy, increases the chances of a cut next month.
“Market pricing has already been responding to the slower approach from the Bank of England, and as a result it’s swap rates that really hold the key to cheaper mortgage deals in the months ahead, rather than future base rate decisions.
“The prospect of lower mortgage rates will add further fuel to the fire for house price growth.
“The latest house price rise reported by the ONS shows the highest rise of 2024, and should perhaps come as no surprise, given the market was especially active at the end of the year.
“With so many buyers looking to complete deals before the year was out, it was inevitable that prices would be pushed higher, a trend that’s unlikely to change in the near future.
“The imbalance between housing supply and demand continues to drive house price growth. With housebuilding down 6% in 2023-24 and well below required levels, prices will likely keep rising to record levels unless construction rates increase significantly, as promised by the Labour government.
“The rush to beat the Stamp Duty increase from 1 April will also be a factor in fuelling house price inflation in the short term.
“That increase in price is going to mean high LTV products are more in demand, and more necessary, than ever before.
“Any lender serious about supporting the next generation of homeowners will need to prove it by delivering competitive deals for those with modest deposits.”
Christopher Blewitt, head of mortgage distribution at Darlington Building Society:
“It’s no surprise to see another increase in both rents and house prices, as stock levels remain challenging with demand outstripping supply and significantly so in certain geographic areas.
“As a society, we are committed to supporting First-time buyers to help them achieve their home ownership aspirations, plus in helping landlords provide suitable and quality private rental property nationwide.
“In such a pressured market, brokers have a huge role to play to help borrowers with the incredible choice available in the UK across mortgage lenders, whilst navigating the undoubted complexities that such choice can throw up.”
Jonathan Hopper, CEO of Garrington Property Finders:
“The property market has made a brisk start to the New Year, with estate agents reporting a surge of interest from both buyers and sellers.
“But November’s fall in average prices serves as a chastening reminder to sellers of just how much competition they face in securing a buyer.
“Compared to October, the prices paid fell in more than half of England’s regions in November.
“Even though the annual figures still show a reassuringly sedate upward trajectory, the monthly data reveals just how keen pricing has become.
“Prices fell by a full 1% in London during November, which may be a whiplash effect from the tax rises announced by the Chancellor in her Budget at the end of October.
“The capital is once again seeing prices fall on an annual basis too, as price-sensitive buyers negotiate hard on price or look elsewhere.
“This is also why regions where value is perceived as strongest are seeing prices rise rapidly. Prices in North East England jumped by 1.1% in November alone, and have surged by 5.9% on an annual basis.
“It’s a similar picture in the North West and in Yorkshire and the Humber, where annual price inflation is a breathless 5.7%.
“The property market is healthy and the January jump in activity is kicking in, but the abundance of homes for sale is putting buyers in the driving seat.
“With mortgage interest rates unlikely to come down as quickly as had been hoped, many buyers are using their strong bargaining position to ask for, and get, discounts.
“Anyone planning to put their home on the market in the coming months will need to price it competitively or risk seeing it sit on the shelf.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“There has not been much change in the pace of increase in rents for new lettings, which is underpinned by the continuing shortage of stock as landlords leave the sector when tenancies end in response to tax and imminent regulatory changes.
“That said, we do expect rents to soften in time as affordability is proving a particular barrier to hoped-for rent increases from landlords.
“We are certainly starting to see some reductions compared with this time last year when you compare similar properties and the rents achieved.”
Daniel Austin, CEO and co-founder at ASK Partners:
“This rise in house prices marks a rebound from the unexpected recent fall.
“However, we believe this signals that growth this year is likely to face pressure and remain steady, as higher borrowing costs start to affect buyers, despite the market’s continued resilience.
“Investors and developers in the residential sector remain motivated by the supply demand imbalance and under the new government, we think there will be more projects that get off the ground.
“We are seeing a greater variety of housing options, such as co-living schemes, coming to market which fulfil the growing requirements of younger professional buyers.
“If prices flatten and interest rates start to fall, we will see more first-time buyers able to step onto the property ladder.”
Rachael Hunnisett, director at April Mortgages:
“House prices may have nudged down slightly in November but they are still up slightly over the year, once again showing the resilience of the market. In part, this is due to the Stamp Duty holiday stimulating demand and partly by the chronic lack of available stock.
“Despite the volatility we have seen in January, and uncertainty around the economy, the one constant that persists is the demand for property in the UK.
“The elephant in the room is the impact of rising house prices on first-time buyers.
“While the desire to escape the expensive rental market and secure good-quality housing has never been stronger, the high cost of homes means that buying a home has become increasingly daunting hurdle for many.
“The cost of housing remains out of reach for many, and lenders play a critical role here. Lenders need to step up and help borrowers access larger loans while maintaining responsible lending practices.
“Perceptions of mortgage products also need to evolve, with longer-term mortgages providing much-needed certainty for borrowers looking to secure the homes they want.
“Choosing the right mortgage isn’t one-size-fits-all. We encourage buyers to consult with a mortgage advisor who can tailor solutions to their individual needs and help them assess the level of risk they are comfortable taking.”
