Private rents in London increased by a record 6.2 per cent in the year to September, according to the latest numbers from the Office for National Statistics.
The figure compares to a 5.9 per cent rise in the year to August, and is the highest monthly increase since the ONS began collating such data in 2006.
Across the UK as a whole, private rental prices increased by 5.7 per cent in the 12 months to September, which is the largest annual percentage change since January 2016, the ONS said.
Annual private rents increased by 5.6 per cent in England, 6.9 per cent in Wales, and 6 per cent in Scotland in the 12 months to September.
“UK rental prices continue to surge reaching record highs for the 18th month in a row,” said ONS head of housing market indices Aimee North.
Private rents in London account for almost a third of UK rental expenditure.
The Royal Institution of Chartered Surveyors (RICS) predicted in its latest residential market survey that as demand for rental properties increases and the supply of them diminishes, rents are expected to increase by an extra 5 per cent on average across the UK over the next 12 months.
“With quality rental properties in high demand across the UK, professional landlords that have the capital ready could look to expand their portfolios to meet this demand, and benefit from increased rental incomes,” said Emma Cox, Managing Director of Real Estate at Shawbrook Bank.
House prices see scant growth
Meanwhile, average UK house prices increased by 0.2 per cent in the 12 months to August 2023, down from 0.7 per cent in July 2023, according to the ONS's House Price Index, also released on Wednesday.
The average UK house price was £291,000 in August this year, which was little changed from 12 months ago, but £9,000 above the recent low point back in March.
House prices did best in north-east England, rising by an annualised 3.6 per cent in August, while the east of England saw the weakest performance, where house prices fell by 1.6 per cent in the 12 months to August.
“While we cannot deny that the market is challenging, it’s positive that we are seeing mortgage rates – and subsequently, house prices – stabilising,” said Mobeen Akram, National New Homes Account Director at Mortgage Advice Bureau.
“Even in the new-build industry, we’ve seen a 3.9 per cent decrease in house prices, which may encourage more homebuyers for 2024.
“The UK housing market continues to stay afloat and stable market performance is always a good thing, and this consistency indicates that it will continue to stand its ground as the year draws to a close.”
The release of the latest inflation figures on Wednesday, which showed the consumer price index stuck at 6.7 per cent in September, prompted some to speculate that the Bank of England will increase interest rates at its meeting in early November, dealing a further blow to UK house prices.
“Property values are likely to fall for the next year to 18 months in my opinion, perhaps by 15-20 per cent from current prices,” Graham Cox, founder of SelfEmployedMortgageHub.com told Newspage.
“We're probably heading into a recession, as inflation, high taxes, soaring rents and mortgage payments continue to slash discretionary spending.
“It's a gloomy outlook, but a short sharp shock may be required to make house prices affordable again.”