Private rental costs across Great Britain surged by 8.6% in the year leading up to July, with the average rent now reaching £1,279 per month, according to the Office for National Statistics (ONS). London experienced the highest rent inflation at 9.7%, while the North East saw the lowest increase at 6.1%. Meanwhile, house prices across the UK continued their upward trajectory, rising by 2.7% annually in June, bringing the average house price to £288,000. First-time buyers are particularly feeling the pinch, with average prices for this group hitting £241,502.
Rising New-Build Prices Outpace Existing Properties
The data reveals a stark contrast in the property market, with new-build prices skyrocketing by 17.3% compared to just a 0.4% increase for existing properties. Nathan Emerson, CEO at Propertymark, highlighted the challenges in the current market, stating, “It is positive to witness further growth within the housing market despite some of the uncertainties consumers have faced this year.” He also emphasised the importance of delivering on the government’s promise to build nearly two million homes over the next five years, stressing the need for these developments to be “in the right areas, with the right infrastructure.”
Landlords and Investors React to Market Trends
Emma Cox, managing director of Real Estate at Shawbrook, noted the optimism in the professional buy-to-let market, buoyed by a recent base rate cut. “This move has reassured property investors, instilling confidence in the long-term economic outlook,” Cox said. However, Sarah Coles, head of personal finance at Hargreaves Lansdown, painted a bleaker picture for renters. “Rental misery is piling on the pressure for another month, with rents up an eye-watering 8.7%,” she commented, pointing out the difficulty renters face in saving for a deposit amidst soaring living costs.
Pressure on First-Time Buyers Continues
The rise in house prices and rents is putting immense pressure on first-time buyers, who are struggling to save for deposits. David Castling, head of intermediary distribution at Atom Bank, highlighted the challenges for this group, stating, “Saving a deposit has only become more difficult as house prices and outgoings have grown.” He called for lenders to provide more support through “high LTV products and more generous LTI caps” to help first-time buyers secure a foothold in the market.
As the property market continues to experience growth, the question remains whether this momentum will be sustainable in the face of economic uncertainties and rising inflation. For UK property investors, the current trends suggest a market that is both challenging and full of opportunity, depending on one’s position within it.
