Average private rents went up by 8.7% in the year to January 2025, a bit lower than the 9.0% rise the previous month, ONS’ House Price Index data revealed.
Rents in England rose by 8.8% to £1,375, in Wales by 8.4% to £780, and in Scotland by 6.2% to £995.
Northern Ireland saw an 8.3% increase up to November 2024.
In England, London had the highest rent inflation at 11.0%, while Yorkshire and The Humber had the lowest at 5.3%.
UK house prices grew by 4.6% to £268,000 over the year to December 2024, up from 3.9% in the year to November 2024.
English house prices rose to £291,000 (4.3%), in Wales to £208,000 (3.0%), and in Scotland to £189,000 (6.9%).
Reaction:
Richard Harrison, head of mortgages at Atom bank:
“The latest ONS figures underline what a strong year 2024 was for house price growth, with prices rising at their fastest rate since February 2023. Even with the unwelcome news of resurgent inflation, it is unlikely that 2025 will be much different.
“Recent data out from Rightmove suggests the gap between supply and demand has narrowed, but it’s still there, pushing prices ever higher.
“Record high house prices have become the norm, and I expect this trend to continue.
“Those hoping to purchase a home will have welcomed the cut to base rate, a move which has already fed through into lower mortgage rates from many lenders.
“While today’s inflation news may reduce the chance of a cut in March, the expectation of additional cuts to come this year, coupled with the increasing availability of higher LTV mortgages, will be further encouragement for those buyers.
“With house prices on the ascent, lenders who are serious about helping first-time buyers have to ensure they are delivering for those with smaller deposits.
“Otherwise the market will become even more reliant on the ‘Bank of Mum and Dad’, freezing out those who cannot turn to well-off loved ones.”
Alex Upton, managing director – specialist mortgages & bridging at Hampshire Trust Bank:
“The rental market remains under significant pressure, with demand continuing to outstrip supply.
“Letting agents are managing multiple applicants for every available property, and while stock levels have seen some movement, competition remains fierce. Until supply and demand move closer to balance, rental prices will keep climbing.
“But addressing this isn’t just about building more homes. The greater opportunity right now is in making better use of existing housing stock.
“Investors are focusing on refurbishment and conversion – revitalising underused properties and bringing them back into the rental market.
“This isn’t just a short-term fix; it’s an essential part of increasing supply in a meaningful way.
“For this to happen at scale, lenders must step up. Investors need financial support that enables them to move quickly, alongside planning frameworks that support these projects rather than slow them down.
“Without that, pressure on tenants and landlords alike will only intensify.”
Ross Turrell, commercial director at CHL Mortgages:
“Today’s data adds to a growing list of reasons for optimism about the UK property sector. With annual growth holding strong at 4.6% and the Bank of England’s recent rate cut fuelling demand, there is a real sense that market activity is ramping up.
“As a result, buyers and investors are showing renewed confidence, and market momentum is building.
“However, while the outlook is positive, there is no room for complacency.
“The surge in transactions ahead of changes to Stamp Duty thresholds is a reminder that challenges remain, including regulatory pressures that could add complexity to investors’ plans in the months ahead.
“Lenders must therefore continue to take a pragmatic and flexible approach. While demand is high, brokers and borrowers still require support, particularly as rates remain elevated.
“Ensuring borrowers can access the right solutions will be key to maintaining momentum and supporting their long-term goals.”
Paresh Raja, CEO of Market Financial Solutions:
“There will be mixed emotions across the property industry today.
“While house prices continue their impressive upward march, this morning’s data showing another rise in inflation will likely trigger concerns around potentially higher interest rates for borrowers.
“For now, those concerns should be tempered by the fact the Bank of England had already warned that inflation would rise to close to 4% by the middle of this year, and yet it still opted to cut the base rate earlier this month.
“This suggests the Bank sees rising inflation as a temporary trend rather than a major economic issue, which could allow for further rate cuts in the coming months, in turn injecting yet more positivity into a property market that, as today’s ONS house price index underlines, has already performed remarkably well over the past year in spite of economic and political turbulence.”
