Average UK rental values continued to grow towards the end of 2018, with December showing a continuation of the steady rise seen throughout the year.
That is according to HomeLet’s Rental Index, which shows a steady rate of inflation in prices in the rental sector.
The average rent in the UK is now £921, up by 1.5% on the same month last year. Excluding London, the average rent in the UK is £763, up 0.7% on last year.
Average rents in the capital are now £1,596, an increase of 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%.
What’s more, the Greater London region recorded the largest year-on-year increase, with growth of 4.7% since December 2017. Meanwhile, the region with the largest year-on-year decrease was the North East, which saw a 4.6% drop since December 2017.
The Office of National Statistics (ONS) found that annualised growth rates of the average UK rent remain below UK inflation rates at 2.3%.
Martin Totty, industry expert and chief executive of HomeLet, commented: “For landlords, there remains a sustained demand for property, with the private rented sector continuing to provide the market with both flexible and long-term housing options.”
According to Nationwide’s December House Price Index, house price growth slowed to 0.5% in 2018, down from 2.6% the previous year. Totty said the slowdown in the rate of house price growth is being driven by the ‘depressed London market’, which saw house prices decline by 0.8% during the last quarter of 2018.
“In contrast, we have seen average rental values in the capital rise by over 4% in the latter stages of the year,” he continued. “Ultimately, we would expect this theme to continue in London, if the demand for property outweighs supply.”
Commenting on the outlook for 2019, Totty predicts that 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,” he added.
According to Totty, the recent taxation changes and more regulation could discourage landlords’ participation in the sector.
He said: “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,” he concluded.