THE average UK rental values continued to grow towards the end of 2018, according to the latest data from HomeLet, with December showing a continuation of the steady rise seen throughout the year.
The HomeLet Rental Index – the UK’s most comprehensive and up-to-date data on rental values in the UK – is showing a steady rate of inflation in prices in the rental sector.
The headlines from this month’s HomeLet Rental Index are:
- The average rent in the UK is now £921, up by 1.5% on the same month last year
- When London is excluded, the average rent in the UK is now £763, up 0.7% on last year
- Average rents in London are now £1,596, up 4.7% on last year. Whilst this is the third consecutive month where the average rental price has decreased, it is the third consecutive month where the rate of annual growth has been above 4%
- The region with the largest year-on-year increase is Greater London, showing 4.7% increase since December 2017
- The region with the largest year-on-year decrease is the North East, showing 4.6% decrease since December 2017
- The December Nationwide House Price Index reports that house price growth slowed to 0.5% in 2018, down from 2.6% in 2017
- Annualised growth rates of the average UK rent remain below UK inflation rates, last reported by the Office for National Statistics (ONS) at 2.3%
Commenting on the data, industry expert and chief executive of HomeLet, Martin Totty, said: “Positively for both tenants and landlords, this year we’ve seen stability in UK rental price growth, with increases remaining broadly in line with the rate of consumer inflation. For landlords there remains a sustained demand for property, with the private rental sector continuing to provide the market with both flexible and long term housing options.
“The slowdown in the rate of house price growth, as reported by the Nationwide House Price Index is being driven by the depressed London market, which saw house prices decline by 0.8% during the last four months of 2018. In contrast, we have seen average rental values in the capital rise by over 4% in the latter stages of the year. Ultimately, we would expect this theme to continue in London, if the demand for property outweighs supply.
Commenting on the outlook for 2019, he further states: “Private residential landlords will continue to play a key role in the wider UK housing market. Whilst the outlook for property investors remains positive, one of the key concerns for the market in 2019 would be a potential lack of supply in certain regions. The government’s squeeze on private landlords via taxation changes and more regulation could discourage their continued participation in this important sector. Unlike the trends we saw in 2018, any reduction in supply could lead to rental increases that are above the rate of consumer inflation.
“The data used in the HomeLet Rental Index provides us with a forward-looking view of the rental market, so it will be interesting to see how this theme develops in early 2019.”