Private rent and house prices, UK: September 2024

The ONS Private rent and house prices, UK: September 2024 has just been released and can be seen here.

Key Points Summary:

1. UK Private Rent Growth:
   • Average private rents increased by 8.4% in the 12 months to August 2024, slightly lower than the 8.6% rise in July 2024.
   • Average rents by country:
     • England: £1,327 (8.5% increase).
     • Wales: £752 (8.5% increase).
     • Scotland: £969 (7.6% increase).
     • Northern Ireland: 9.9% rise (up to June 2024).
2. Regional Rent Inflation:
   • In England, rent inflation was highest in London at 9.6% and lowest in the South West at 6.4%.
3. UK House Price Growth:
   • Average UK house prices rose by 2.2% to £290,000 in the 12 months to July 2024, down from 2.7% in June 2024.
   • Average house prices by country:
     • England: £306,000 (1.6% increase).
     • Wales: £218,000 (2.0% increase).
     • Scotland: £199,000 (6.0% increase).
     • Northern Ireland: £185,000 (6.4% increase in Q2 2024).
4. Data Considerations:
   • Revisions to estimates may be larger than usual due to lower transaction and new build volumes.
   • Northern Ireland private rent statistics will adopt the PIPR methodology starting March 2025.
5. Rent and House Price Trends:
   • Both private rent and house price annual inflation rates have been easing since their peaks in early 2024.
   • Tenant demand remains high, but new landlord instructions have decreased, according to RICS.
6. Regional House Price Trends:
   • The North East had the highest house price inflation in England (3.8%).
   • London saw a slight decrease in house prices (-0.4%).
7. Private Rent Statistics:
   • The average rent across Great Britain in August 2024 was £1,286.
   • The highest rents were recorded in London (£2,129), while the lowest were in the North East (£682).
8. Rent Variations by Property Type:
   • Detached properties had the highest average rent in Great Britain (£1,486), while flats/maisonettes had the lowest (£1,253).

Industry comments:

Richard Harrison, Head of Mortgages at Atom bank, comments:

“There is clear momentum building in the housing market currently. The first base rate cut in four years has helped spark activity and a bit of competition among lenders, bringing back prospective buyers who might have put deals on hold. For example, Rightmove has suggested that the number of interested buyers contacting estate agents is up by 19% compared with a year ago.

“Lower mortgage rates are undoubtedly playing a part here, and while another base rate cut this week looks unlikely, the markets seem to expect another cut before the end of the year, spelling more good news for potential buyers. Moneyfacts data shows that average interest rates for two- and five-year fixed rates have fallen for two straight months, a trend that borrowers will hope to see continue.

“September marks the two-year anniversary of the ill-fated mini-Budget, an excellent reminder of the devastating impact the political world can have on mortgage rates and the housing market. With the Budget due next month, I hope the new Government is thinking carefully about how it can positively shape the prospects for homebuyers and homeowners in the years ahead, particularly first-time buyers. The housing ladder can only function if people are able to get onto that first rung.”

Alex Upton, Managing Director, Specialist Mortgages, Hampshire Trust Bank

“Rents have continued to rise sharply, reflecting the ongoing shifts in the rental market landscape. With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing. As the Royal Institution of Chartered Surveyors (RICS) has noted, while more landlords are bringing properties to market, tenant demand is still outstripping supply. This imbalance is likely to push rents higher as we move forward.

“Rather than a mass exodus, what we’re seeing is a refinement of strategy among professional landlords who are keen to adapt to the evolving market. There’s growing interest in more specialist, higher-yielding investments—such as HMOs or semi-commercial properties—that can provide a better return on investment. Landlords are looking for ways to diversify and strengthen their portfolios, and they’re increasingly open to exploring different property types to achieve that.

“With the Budget approaching, there’s a lot of speculation about potential changes that could affect landlords. I’d like to see a focus on positive measures that encourage continued investment in quality rental housing and support the professional landlords who are committed to providing high-standard homes. The private rental sector is crucial to meeting housing demand, and it’s essential that we don’t lose sight of that.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “With inflation sticking at 2.2 per cent and expected to edge up in the autumn, it’s unlikely this will trigger a further rate cut from the Bank of England this month, although the markets still expect at least one further rate reduction before the end of the year.

“The good news for borrowers is that mortgage rates continue to soften, with Santander introducing a sub-4 per cent two-year fix on the back of the lowest two-year Swap rates in two years. There are also plenty of five-year fixes at sub-4 per cent for those looking for certainty over a longer period.

“While rock-bottom rates have long gone, these reductions are giving borrowers some comfort after a prolonged period of rising rates. Competition between lenders is likely to mean further gentle reductions in mortgage rates as they vie for new business.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “Most properties are getting a good number of viewings but pricing is very important. Well-priced properties sell, everything else sits on the market, goes stale and ultimately will achieve less than it could have realised if the price had been more realistic in the first place.

“We achieved over asking price on two houses this week alone, and have another house that after just a 2 per cent price reduction, received an offer at the new asking price. The owners were sensible and understood a small price correction was needed to get the applicants to offer. Of what we sold this week, two houses were on a main road and one backed onto a railway proving all properties are saleable if the price is right.

“This isn’t a market where buyers are coming in with big offers, there are some exceptions to this but most people want to see properties that are reasonably priced and not waste their time. In a rising market, you can ask a high price and know applicants will view and offer but a flat market is very different.

“It looks unlikely that the Bank of England will cut rates this month but a November rate cut, while too late to impact the housing market this year, will help kickstart the 2025 market.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: 

“The market is baring its teeth once more, demonstrating considerable resilience as these figures, unlike others, reflect cash and mortgage transactions in the build-up to the election when we would have expected economic worries to have compromised prices.

“Since then, falling mortgage rates, steadier inflation and more political certainty have helped to release pent-up demand and supply. 

“Looking forward, we do not anticipate prices will pick up sharply as the improved choice and concerns, particularly among higher-end buyers and sellers, mean caution is prevailing.”

Gareth Lewis, managing director of specialist lender MT Finance, says:

“Property prices are rising because there aren’t enough sales transactions. Those buyers that are going ahead are paying a higher premium because there is still less stock available.

“However, agents report seeing an increase in activity. Whether that will mean more stock coming on and therefore more of a buyers’ market and flatter from a pricing point of view, only time will tell. 

“People are waiting and seeing what the Budget has in store, mindful of some of the pledges Labour have made. However, the Government should be mindful that it still needs the property market to be functioning and ultimately that comes from more stock and more transactions. Some stimulation is essential to encourage more people to move.”