As property ownership in the UK becomes increasingly expensive due to rising borrowing costs, rents in the country in the 12 months to April 2023 increased by nearly 5% compared to the same period last year.
According to data released by the UK Office for National Statistics (ONS) on May 29, UK house rents increased by 4.8% year-on-year in the 12 months to April 2023, a record high since the data was first kept in 2016. In London , the rate was even higher, up 5%, the highest since November 2012.
According to Ms. Aimee North, Head of Housing Market Indicators at the ONS, the rapid increase in house prices in the UK shows no sign of easing.
Rents are rising at a time when owning property in the UK is becoming increasingly expensive due to rising borrowing costs. Average mortgage rates rose by 4.4% in March, the highest since 2008, according to figures released by the Bank of England (BoE) earlier this month.
Mortgage costs in the UK have risen sharply as the BoE has repeatedly raised interest rates from 0.1% in November 2021 to 4.5% now and is expected to raise rates again in June after UK inflation in April slowed more than expected.
According to Mr. Myron Jobson, financial analyst at financial company Interactive Investor (UK), when mortgage prices increase, people will tend to rent instead of owning a house.
Tom Bill, head of residential research at real estate firm Knight Frank, said the lack of suitable properties was partly to blame for rising rents and the growing number of tenants struggling to make ends meet.
Rising mortgage prices were reflected in ONS figures, which showed UK house prices fell by 1.2% between February and March, a sixth consecutive monthly decline.
The UK housing market continued to decline in March as low buyer affordability weighed on demand, said Gabriella Dickens, an economist at Pantheon Macroeconomics, a UK economic consultancy.
The average house price in the UK stood at £285,000 (about $348,000), £8,000 lower than its peak in November 2022, but £11,000 higher than in March last year.
The annual rate of home price growth slowed to 4.1% in March, the lowest since September 2020 and down 5.8% from February.
Ms Dickens said house prices would recover somewhat thanks to lower energy prices and a slight increase in real household incomes after welfare payments began to increase in April. However, she warned that house prices would continue to fall this year due to high mortgage costs./.
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