In February 2024, the UK experienced a significant rise in rental costs, marking the highest annual growth rate since 2015, while house prices showed a slight decline, presenting a complex scenario for tenants and potential homebuyers.
In February 2024, the UK rental market experienced a notable increase, with private rent costs rising by 9% over the 12 months to February, according to the Office for National Statistics (ONS). This increase, up from 8.5% in January, represents the highest annual rate of growth since 2015. London observed the most significant rent inflation at 10.6%, with Brent specifically experiencing the highest annual rental growth. In contrast, house prices across the UK recorded a modest decline of 0.6% in the year to January 2024, though Scotland bucked the trend with a 4.8% increase in house prices.
Kensington & Chelsea were identified as having the highest rental prices, whereas Dumfries & Galloway had the lowest. These changes in the rental market have been described as “brutal” for tenants by Jonathan Gordon, director of wealth management at IP Global, who noted that landlords’ rising costs are being passed down, leading to rent hikes that surpass wage growth. This deepening gap between rent increases, currently exceeding the inflation rate sitting at 3.4%, and wage growth, places considerable pressure on tenants.
While the slight decrease in average house prices might offer some hope for prospective homeowners, the continual strong demand for housing implies that significant drops in house prices are unlikely in the immediate future. The current trends in the UK housing market, encompassing both rental and purchase sectors, indicate a critical juncture, with implications for tenants, landlords, and prospective buyers alike, necessitating ongoing monitoring to fully understand the evolving dynamics.
