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Cost of privately renting homes rises by more than 9% in a year
Earth Encounters news portal2024-05-09 06:13:02【business】3People have gathered around
IntroductionThe cost of privately renting a home has rocketed by the largest proportion since records began to h
The cost of privately renting a home has rocketed by the largest proportion since records began to heap more pressure on families unable to get on the housing ladder.
Across the UK, private rents increased by an estimated 9.2 per cent in the 12 months to March, the Office for National Statistics (ONS) said.
This is up from 9 per cent in the 12 months to February - marking the highest annual increase since the UK data started in January 2015.
The massive increase in rental costs comes at the same time as a fall in the cost of buying appears to be slowing.
The average UK house price fell by 0.2 per cent in the 12 months to February, slowing from a decrease of 1.3 per cent in the 12 months to January. Across the UK, the average house price was £281,000.
It came as Jeremy Hunt hailed brighter signs on the economy today as inflation dropped to the lowest level in two and a half years.
The headline CPI rate fell to 3.2 per cent in March, down from 3.4 per cent the previous month and driven largely by easing food prices.
It was last lower in September 2021 - although analysts had pencilled in a bigger dip to 3.1 per cent.
Rishi Sunak insisted the official figures showed the 'plan is working' and people will 'start to feel the difference'.
The numbers were revealed after Andrew Bailey hinted that the Bank of England could start cutting interest rates before the US Federal Reserve.
However, markets have pushed back their expectations slightly after the inflation dip was slightly smaller than hoped.
In the 12 months to February, average house prices fell in England to £298,000 (a 1.1 per cent decrease), fell in Wales to £211,000 (a 1.2 per cent decline) and increased in Scotland to £188,000 (a 5.6 per cent rise).
The ONS said the rise in Scotland's annual inflation rate in recent months 'is more reflective of Scotland's average house price falling this time last year, rather than increasing in recent months'.
Average house prices increased by 1.4 per cent to £178,000 in the year to the fourth quarter of 2023 in Northern Ireland.
In England, the typical private rent was £1,285 in March, up 9.1 per cent (£107) from a year earlier. This was the highest annual rise since records started in 2006.
In Wales, rent increases held steady, rising by 9.0 per cent (£60) compared with a year earlier. The average private rent for Wales was £727 in March. This annual rise was unchanged from the 12 months to February, the ONS said.
The average private rent in Scotland was £947 in March, up by 10.5 per cent (£90) from a year earlier. Scotland's annual inflation rate has been generally slowing since a record-high annual rise of 11.8 per cent in August 2023, the report said.
Northern Ireland figures were only available up to January 2024. Average private rents in Northern Ireland increased by 10.1 per cent in the 12 months to January - the highest annual rise since records started in 2016.
Jake Finney, an economist at PwC UK, said the small 0.2 per cent annual fall in house prices across the UK potentially signals 'that we are approaching the end of the housing market correction'.
He added: 'Ultimately, the extent of the recovery will depend upon the pace and scale of the Bank of England's rate cuts which are expected later this year.
'On the flip side, private rental inflation continues to reach new highs, adding to the cost-of-living pressures facing households.'
Chancellor Jeremy Hunt insisted the official figures showed the 'plan is working' and people will 'start to feel the difference'
The figures were released on the same day the ONS said Consumer Prices Index (CPI) inflation eased back to 3.2 per cent in March, from 3.4 per cent in February.
It was the lowest level of inflation since September 2021, although economists had predicted a slightly lower reading of 3.1 per cent for the month.
Andrew Montlake, managing director of Coreco mortgage brokers, said of the smaller than expected easing in inflation: 'Figures such as these inevitably make the Bank of England jittery and push the chances of a summer rate cut back into the long grass.'
Matt Smith, Rightmove's mortgage expert, said: 'It's positive to see inflation continuing to fall this morning, albeit not by quite as much as expected, as the blocks continue to build towards the anticipated first base rate cut later this year.
'The market is proving resilient despite broader global uncertainty, however continued stability in mortgage rates should be seen as a positive outcome over the next few weeks.'
Tom Bill, head of UK residential research at estate agent Knight Frank, said: 'Higher borrowing costs, increased supply and a wave of owners rolling off sub-2 per cent mortgages agreed in early 2022 are all putting downwards pressure on house prices.'
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that until swap rates, which lenders use to price mortgages, are consistently falling, 'lenders are unlikely to reduce mortgage rates further'.
David Hollingworth, associate director of communications at L&C Mortgages, said: 'The Bank (of England) is likely to take the threat of inflation remaining higher for longer seriously and has repeatedly suggested it won't act until it's sure that inflation is under control.
'Market expectation will be important in determining fixed-rate pricing. Fixed rates have fallen substantially since last summer but have largely stabilised. With uncertainty still in the air as to how quickly the base rate may fall, those holding out for further cuts may find themselves in for a long wait.'
Nick Leeming, chairman of estate agent Jackson-Stops, said: 'Across the Jackson-Stops network in March we saw a positive uptick in the number of new instructions from sellers and sales agreed, this should soon trickle down into the number of completions we are seeing over the next few months.
'It remains clear that where properties have been priced fairly, and in line with local market conditions, there continues to be high interest from committed buyers who are pressing on with their searches.'
Jonathan Hopper, chief executive of Garrington Property Finders, said that until interest rates start falling again, many people who have delayed home moves will remain on the fence.
He added: 'The prospect of election uncertainty later this year may make the top of that fence very crowded indeed in coming months.
'The property market is heading in the right direction, but progress is likely to be slow and meandering, with wide variations across regional and local markets.'
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