Today's ONS figures show London winning – and being the biggest loser
The property market may be finally moving, there’s a big interest rate decision across the pond today, and for us the BoE will make a decision tomorrow - all of which are exciting times for the mortgage industry. And the latest ONS report on rents and home prices has just dropped – showing some interesting trends.
Private rents across the UK have continued their upward trajectory in the year to August 2024, growing by 8.4%, according to ONS provisional data. Although this marks a slight slowdown from the 8.6% recorded in the 12 months to July 2024, and the peak of 9.2% in March 2024 it is still a significant figure – perhaps adding fuel to demands to try to stifle the buy-to-let market.
Despite the overall rise, regional disparities reveal contrasting performances across the UK.
In England, average rents rose by 8.5%, bringing the typical monthly rent to £1,327. Wales matched this rise with an 8.5% increase, reaching an average of £752, while Scotland saw a smaller 7.6% rise, bringing average rents to £969. Northern Ireland, based on data available until June 2024, recorded the largest increase, with a 9.9% rise in rents.
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London and South West: Best and worst performers for rent inflation
Within England, rent increases varied widely. London led the nation with a 9.6% surge in the year to August 2024, maintaining its position as the most expensive rental market in the country. The average rent in the capital now stands at £2,129 per month. In contrast, the South West saw the lowest rent growth, with a 6.4% increase, bringing average rents to half that of the Capital at £1,049.
Scotland’s rental market continues to cool after reaching a record high inflation rate of 11.8% in August 2023. The latest data shows a more modest increase of 7.6% in August 2024. However, renters in Wales saw a steeper rise, with rents climbing by 8.5%, driven by high demand and a scarcity of new rental properties coming to market.
House Prices: It’s better up north
UK house prices also saw slower growth, with the average price rising by 2.2% in the 12 months to July 2024, bringing the typical house price to £290,000. This was down from 2.7% in the previous month and marked the fifth straight month of price increases following an earlier period of annual declines.
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Regionally, house price growth was most pronounced in the North East of England, where prices increased by 3.8%, outperforming all other regions. In contrast, London was the weakest performer, with house prices falling by 0.4%, marking a notable decline after a modest 0.5% increase in June 2024. Despite this fall, the average house price in London remains the highest in the country, at £533,000.
In the devolved nations, house price growth was more robust. Scotland led the way with a 6% rise, bringing the average house price to £199,000. Wales saw a 2% increase, with the average home now costing £218,000. Northern Ireland, based on data up to Q2 2024, experienced a 6.4% rise, pushing average prices to £185,000.
Regional Rent and House Price Trends
Great Britain’s average rent in August 2024 was £1,286, up £100 from the previous year. Aside from London’s high average rent of £2,129, the North East remained the most affordable region, with average monthly rents at £682.
Meanwhile, local variances in house prices continue to highlight stark contrasts. The North East, while having the lowest average house price at £155,000, recorded the highest house price inflation, underscoring the region’s growing housing market demand. On the other hand, house prices in Wales and Scotland grew at very different rates, with Scotland seeing stronger growth at 6%, compared to Wales’ 2% rise.
Future Outlook: Data Improvements and Market Pressure
Looking ahead, the Office for National Statistics (ONS) is developing enhanced rent statistics for Northern Ireland. From March 2025, the Price Index of Private Rents (PIPR) methodology will be used, allowing for more accurate comparisons between Northern Ireland and the rest of the UK. Current figures for Northern Ireland, however, are still subject to revisions.
The Royal Institution of Chartered Surveyors (RICS) noted in its August 2024 UK Residential Market Survey that tenant demand remained high, while new landlord listings fell, adding further pressure to the rental market. These supply and demand imbalances are expected to keep rental prices elevated, even as inflation begins to cool in some areas.
According to some pundits, we could see some volatility in house prices as some owners rush to sell before a possible capital gains tax bump from Rachel Reeves in next month’s budget.
