House price and rental growth slow in August
Two new indexes reveal that both rental growth and house price growth eased in August, as predicted by analysts.
The August 2016 edition of the Home Let Rental Index found that annual rental growth was 3.1% higher than the same period last year, with the average UK rental value recorded as £913pcm, as opposed to £885pcm.
These figures highlight a reduction in the 5.6% rate of increase seen in August 2015.
HomeLet has called the rate of growth “sustainable”. The fastest annual rent growth (5.8%) was seen in the East of England, followed by Wales, where rental growth was 5.2% and the North West (4.3%).
In the North East rental growth fell by 1.6% drop, while the East Midlands sustained a 1% rise.
Rental growth in Greater London slowed to 2.7% year-on-year, as compared to the 7.7% increase seen in August 2015.
Commenting on the figures Martin Totty, chief executive officer at Barbon Insurance Group said this latest Index reflected a private rental market in which landlords were engaged in a delicate balancing act, in that they’re aware of tenants’ concerns about affordability while also conscious of the need to achieve their target yields against a backdrop of rising costs.
“August’s figures suggest that rents are continuing to rise at a sustainable pace – ahead of price inflation, but well below house price increases, which were running at close to 6% according to the most recent data.
“In the medium to longer term, the fundamental driver of rents will be the balance between demand and supply for rented property.
“We expect demand in the private rental sector to continue to grow, in line with demographic changes such as population growth, and as affordability concerns remain in the house purchase market, so it is important that we see efforts to support supply,”
he said.
The latest Halifax House Price Index put annual house price growth at 6.9% in August - the lowest yearly growth rate since October 2013.
Down from 8.4% in July, these latest figures show a downward trend from March this year, when the annual growth rate reached 10%.
The Index also revealed that house prices in the last three months (June to August) were 0.7% higher than in the preceding three months, down from 1.5% in July.
Quarterly rates of increase have also fallen over the past six months, since their 3.0% peak in February.
Martin Ellis, Halifax housing economist, said:
“House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase. There are also signs of a softening in sales activity.
“The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”
7th September 2016
