Annual house price growth in the UK has shown a slowdown, but private rents are continuing to rise at a near-record rate, according to a report from the Office for National Statistics (ONS). The report indicated that property values across the UK increased by an estimated 2.2% in the 12 months leading up to July, with the average house price reaching £290,000. This growth rate represented a decrease from the 2.7% increase seen in the preceding 12 months up to June.
In July, average house prices saw growth in England to £306,000 (1.6% annual growth), in Wales to £218,000 (2.0%), and in Scotland to £199,000 (6.0%). Meanwhile, in Northern Ireland, the average house price stood at £185,000 between April and June 2024, marking a 6.4% increase from the previous year. The North East of England experienced the highest house price inflation at 3.8% in the 12 months to July, whereas London was the only region to see a decline in annual house prices, falling by 0.4%.
Aimee North, the head of housing market indices at ONS, noted, “Annual house price growth slowed this month. The North East saw the highest annual growth while London was the only region to show annual price falls.” She also highlighted that rental prices have been on the rise, with London experiencing the fastest growth in rents, although the south-west of England had the slowest increase at 6.4%.
According to the ONS, the average private rent across Britain in August 2024 was £1,286 per month, representing a £100 increase or 8.4% rise compared to the previous year. In London, rents increased by 9.6% annually in August, slightly below the record high of 11.2% seen in March 2024. The report was released alongside separate ONS figures showing that UK inflation remained steady at 2.2% last month, marking the second consecutive month above the target 2% level.
Experts anticipate that the Bank of England will maintain the base rate at 5% following these figures. Mortgage rates have been gradually decreasing in recent weeks, with Richard Harrison of Atom bank suggesting that while a base rate cut this week seems unlikely, there may be further cuts anticipated later this year. Sarah Coles from Hargreaves Lansdown added that mortgage borrowers on tracker rates might have to wait longer for rate reductions, but those considering fixed-rate mortgages or remortgaging could benefit from the downward trend in mortgage rates.
Mortgage broker Mark Harris mentioned the softening mortgage rates, with Santander introducing a sub-4% two-year fix based on the lowest two-year swap rates in two years. He also noted the availability of sub-4% five-year fixes. David Hollingworth of L&C Mortgages highlighted the competitive lending landscape leading to regular mortgage rate adjustments and the potential for further rate improvements as attention turns to the base rate decision. The positive shift in the housing market amidst economic uncertainties was echoed by Nicky Stevenson of Fine & Country, emphasizing recent mortgage rate cuts as a promising development.
Additionally, Nathan Emerson of Propertymark acknowledged the challenges faced by landlords in a changing economic environment, while Gareth Atkins from Foxtons advised landlords to leverage the current market activity to secure quality tenants in the quieter fourth quarter. The property market’s resilience, amidst broader economic indicators, hints at a positive outlook, according to Stevenson. Overall, the housing market remains robust, with recent mortgage rate reductions offering encouragement to potential buyers and landlords alike.