House prices grow steadily as ‘eye-watering’ rent increases hit

The cosyt of renting across the country jumped 8.6% in the year to July

Landlords continue to sell up in the face of higher mortgage costs

The rate at which house prices were rising in the UK steadied in June, as tenants continued to be squeezed by soaring rents

The average price tag for a home increased by 2.7% in the 12 months to June, unchanged from May, the Office for National Statistics (ONS) said.

It marked the fourth month in a row that prices have increased annually, as momentum returned to the market following eight months of annual price falls.

The average cost of a home in June was £288,000 and private rents across the country jumped 8.6% in the year to July, averaging £1,319.

Annual price rises in England and Wales slowed slightly in June, compared with May, but increased in Scotland.

The average house price was £305,000 in England, up 2.4% from a year earlier, and £216,000 in Wales, up 1.8% from a year earlier.

In Scotland, the average property cost £192,000, up 4.3% from a year ago.

The average house price in Northern Ireland was £185,000 between April and June, 6.4% higher than the same period a year ago.

Meanwhile, private rents across the country jumped 8.6% in the year to July, averaging £1,319, according to the ONS’s estimates.

This was unchanged from the year to June, and remained below the record-high annual rise of 9.2% recorded in March.

Rent inflation in London hit 9.7% in July, with the average cost for a rental property recorded at £2,114.

Nathan Emerson, chief executive of Propertymark, said: “The rental market continues to feel the harsh reality of ongoing pressures on housing demand, which are outstripping current supply.

“This has a real-world effect on rental prices for consumers and that consequence is prices tend to be pushed further upwards.

“It is crucial the mismatch between supply and demand is addressed as a priority to help ease a current ‘nine applications per available property’ trend that we are witnessing.”

Sarah Coles, head of personal finance for Hargreaves Lansdown, said rent rises remain “eye-watering”, despite the pace of increases slowing.

“Landlords continue to sell up in the face of higher mortgage costs, tougher tax rules and the likelihood of more stringent legislation,” she said.

“Meanwhile, growing tenant numbers make it harder to get hold of a property, even if you’re prepared to pay sky-high prices. It’s difficult to see how things will ever get any better.”