UK rental costs in August rose at fastest pace since records began

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Residential rental costs increased at the fastest annual rate since records began seven years ago, while UK house price growth slowed to its lowest level in a decade, according to official data released on Wednesday.

Private rents rose by 5.5% year-on-year in August, slightly higher than July’s 5.3% increase, which was the largest annual percentage increase since the ONS data series began in January 2016.

Meanwhile, annual house price growth fell to 0.6% in July from 1.9% in June, the lowest growth rate since September 2012, according to separate data from the Office for National Statistics.

Trends in rents and house prices reflect a spike in mortgage rates over the past two years, which has made property unaffordable for many, fueling tight rental demand in a market where landlords are passing on increased borrowing costs.

Emma Humphreys, partner at law firm Charles Russell Speechlys, said: “Some tenants are struggling to pay their rent and many landlords are feeling the same pressure, with rising mortgage payments and changes to tax relief forcing many Abandoned their housing.” Features. ”

The line chart of annual changes in the rental price index, % shows that UK residential rents increased by 5.5% year-on-year in August

While lenders have started to cut mortgage rates in recent months, they remain close to 15-year highs, reflecting the Bank of England’s consecutive hikes to 5.25% from a record low of 0.1% in November 2021.

ONS data shows that Wales had the fastest rent growth in August at 6.5%, followed by Scotland at 6%, while the average increase in England was 5.4%. Northern Ireland’s June figures showed growth of 9.1%.

London’s annual rental growth rate of 5.9% is the highest of any UK region and the highest annual rate since the data series began in January 2006.

London was also one of the outliers in house price trends, with an annual decrease of 0.8% in July, although the fall in the south-west of England was greater, at 1%.

The average house price in the UK was £290,000 in July, down £2,000 from the peak in November but still £59,200 higher than in February 2020, the last month before the coronavirus pandemic struck.

Gabriella Dickens, economist at Pantheon Macroeconomics, said the latest data from Nationwide and Halifax showed house prices fell at the fastest annual rate since 2009 in August, meaning “the next few months The official index is likely to fall further”.

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