In a mixed landscape for the UK housing sector, house prices have experienced a modest resurgence, while rental rates continue to climb, adding pressure to an already strained market, according to the latest reports from the Office for National Statistics (ONS).
House Price and Rental Trends
The latest data from the ONS indicates a 1.8% increase in average house prices across the UK for the year ending in March, with the average price now standing at £283,000. Notably, new-build homes have seen a significant price surge, with a 17% increase over the past year. Meanwhile, the private rental market has seen an 8.9% rise in costs in the year to April, albeit a slight deceleration from the previous month’s 9.2% increase. London leads with the highest rent inflation at 10.8%, while the North East experiences the lowest at 5.8%.
Market Dynamics and Outlook
Sarah Coles, head of personal finance at Hargreaves Lansdown, comments on the current state of the property market, stating, “Buyers have finally squeezed some growth out of the property market… Meanwhile, the rental market continues to get increasingly uncomfortable – just at a slightly slower rate than before.” The property market’s sluggishness in part reflects the time it takes for sales to complete, with transactions typically concluding within four months, reflecting sentiments from late 2023 when mortgage rates began to fall due to anticipated rate cuts.
Insights from Industry Experts
Daniel Norman, CEO of APRAO, highlighted the robust performance of the new homes sector, suggesting that while existing home sales are constrained by high mortgage rates, buyers are willing to pay a premium for new-build homes due to the benefits they offer. Ed Phillips, CEO of Lomond, and Marc von Grundherr, Director of Benham and Reeves, also commented on the market’s positive direction and the potential for a summer boom in house prices due to expected interest rate reductions. Verona Frankish, CEO of Yopa, added, “This growing positivity is now filtering through to sold price values and with a rate cut now expected in the coming months, we anticipate the property market to heat up over the summer.”
As the UK navigates the complexities of its housing market, the blend of rising prices and escalating rents underscores the dual challenges facing buyers and renters alike. With potential interest rate cuts on the horizon, stakeholders remain cautiously optimistic about the market’s direction.