Rent rises have almost doubled in a year

According to the most recent official government rent index, the average private rent in the UK rose by 9.2% during the course of the year ending in March 2024

Over the same time frame, average monthly rent in England rose to £1,285 (9.1%), in Wales to £727 (9.0%), and in Scotland to £947 (10.5%). The percentage for Northern Ireland was 10.1%. England`s private rent inflation rate was 6.1% in the North East and 11.2% in London.

Due to the ongoing mismatch between supply and demand, rents are still growing, albeit a little more gradually. In practice, affordability is the primary factor, but the recent announcement that the cost of living is increasing more slowly will undoubtedly benefit tenants—especially those who spend a large percentage of their income on living expenses. The majority of landlords understand that a great tenant is preferable to the highest rent, despite the fact that many are finding it difficult to pay increased regulatory, mortgage, and tax expenses. The rise in annual rental values is almost double digits because of strong demand and limited supply.

The mismatch between supply and demand that exists in many UK regions is the primary cause of the rise in private rental inflation. There are still many more renters than there are homes, even though the record highs for tenant demand were reached last summer. The supply of rental properties has to be expanded to keep up with the anticipated rapid population growth and household formation in the upcoming years.

Landlords are constantly adapting and changing to meet the challenges of the cost of living crisis which continues, and in order to make their rental a worthwhile business, rent increases are often inevitable, necessary, and justified.

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House prices rise to make new record

The average asking price for a house has increased to £372,324, a 1.1% rise since March

The average price is now only £570 shy of its all-time high, which was set in May 2023, which is consistent with the kind of increase we often see at this time of year. The primary cause of this is a rise in the average asking price of "top-of-the-ladder" properties, which are usually the most expensive ones. These residences, which include detached four-bedroom homes and homes with five or more bedrooms, have also had the biggest price rise this year thus far in the last ten years.

There is presently greater activity at the top of the market for several reasons. Following the September 2022 mini-Budget, mortgage rates spiked, delaying the plans of some property buyers seeking for top-of-the-ladder properties. However, a lengthy time of pent-up demand in this industry is finally being released. Compared to the previous year, an additional 18% of sellers of these bigger homes have listed their properties for sale. All property classes have seen an increase in the number of agreed sales, but when compared to the same period in 2023, top-of-the-ladder residences have had the largest increase in sales, up 20%. The surge in activity has given new sellers the impression that they can seek more for their properties than they could a year ago.

The top-of-the-ladder market continues to be the primary driver of price action at the beginning of the year. Movers in this market are usually more equity-wealthy and less susceptible to rising mortgage rates. Due to salary growth and steady home prices, some purchasers in all market segments will feel that their affordability has improved from the previous year. However, others will be more negatively impacted by issues related to rising mortgage rates and the cost of living.

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