UK residential rent growth slows to match pace of house price growth

Rent price rises in the UK have slowed to match the pace of house price growth in the country after nine months of sustained faster growth, the latest index figures show.

It means that rent prices are now 8.5% higher than a year ago for the three months to September 2015 after six months of annual rises over 10%, according to the data from HomeLet.

The average rent in the UK for new tenancies in the period was £995 per month but in
Greater London it was £1,555 per month although rents dropped here on a month on month basis for the first time since February 2015.

The index report suggests that deflation across the economy, and rising real incomes, mean the slowdown in rents could be temporary.

A breakdown of the figures shows that nine out of 12 UK regions are still seeing rent prices rise on an annual basis, with the largest increases seen in Scotland at 8.4%, the East Midlands at 7.7% and Greater London at 6.6%.

The figures also show three regions in negative annual price movement, with prices in the North West 4.6% lower than a year ago, 2.2% lower in East Anglia and 1.4% lower in Northern Ireland.

Comparing September figures to the previous month, the index reveals that only three regions have seen rent prices rise since August. In the three months to September 2015 only Scotland, the East Midlands and West Midlands have seen prices rise by 1.2%, 1.4% and 1.4% respectively.
 
Every other region of the UK has seen rent prices fall modestly in the three months to September 2015, with the largest price reductions seen in the South West, the North East and North West with a fall of 2.4%, 2.3% and 2.2% respectively.

‘The UK economy has dipped into negative inflation which is a boost to consumers’ spending power and, ultimately, their real income. Affordability is an important factor in determining rents,’ said Martin Totty, chief executive of Barbon Insurance Group, owners of HomeLet.

‘Depending on what happens with inflation and real incomes over the coming months, could have a bearing on future rental price trends especially where, in certain areas of the country, the supply of rental listings is not keeping pace with demand from those wishing to be private sector renters,’ he added.

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Source: Property News Spain