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Rent increases will be four times the rate of house price rises
Rent increases will be four times the rate of house price rises 伦敦
By   RYAN BEMBRIDGE
  • 都市报
  • Rent increases
  • house price increases
  • UK housing market
Abstract: It's going to be a tough time for renters in the UK as the cost of renting is set to rise four times as much as house prices.

According to the findings of the Hampton Housing Market Forecast study, rising rents and falling house prices will be the result of the high interest rate environment we are currently experiencing.


Rents are set to rise by 25 per cent over the next four years, outstripping the 5.5 per cent rise in UK house prices over the same period.


It is thought that supply issues combined with rising costs for landlords will lead to a surge in rents.


Aneisha Beveridge, head of research at Hamptons, said: There is a strong argument that the measures taken by the Bank of England to tame inflation have hit the rental sector harder than any other part of the housing market.


"The build-up of long-term supply problems combined with soaring landlord costs have put upward pressure on rents. And these pressures are hard to subside in the short term, which is why we expect rents to continue to rise over the next few years."


House prices are set to fall by 2.5 per cent in the final quarter of this year, giving a real annual fall of 7.4 per cent when inflation is taken into account.


Transaction volumes are expected to fall by 19 per cent in 2023, with completions falling from 1.23 million in 2022 to 1 million this year.

Rent increases will be four times the rate of house price rises

Hampton said 2025 will mark the start of a new property market cycle and for the first time since 2015, London will outperform all other regions with an annual price growth rate of 5.0 per cent.


Overall, London will see its strongest growth of 11.5 per cent between 2023 and 2026, with house prices in Wales likely to remain flat.


London rents are also likely to rise faster than the UK average in 2023 and 2024 (9 per cent and 8 per cent respectively) due to lower yields and more landlords relying on finance.


Beveridge added: While rising interest rates and the tightening cost of living have caught many households off guard, it is becoming increasingly clear that the house price crash envisaged by some forecasters is not on the cards.


"Instead, we expect to see a small fall in house prices in 2023, followed by a slower recovery in subsequent years as households adjust to an era of higher interest rates. This will be more similar to the U-shaped recession of the early 1990s than the V-shaped crash of 2008 and the rapid recovery that followed.


On paper, the decline in house prices we forecast is slight in nominal terms. But high inflation in other goods and services means that, in real terms, the average price of a home will fall by around 11 per cent between 2022 and 2024.


"This fundamentally reflects the "correction" from rising interest rates. This is why we expect house prices to rise again in both real and nominal terms from 2025 as interest rates fall to a new normal and a new housing cycle begins."

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Rent increases will be four times the rate of house price rises
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