Rent and Property Prices Still on the Rise

Pace of growth is slowing down but prices remain high

Rent and house prices continued on an upward trend towards the end of 2022, according to new ONS data. Although the pace of growth is slowing down, property prices remain high by historical standards.

In England, prices rose the fastest last year in the North West, increasing by 13.5%. And because prices are still rising at a quicker rate than incomes, it’s become increasingly difficult for first-time buyers to get a foot on the property ladder.

The data also showed that tenants are seeing a rise in the cost of rent. In the year to December 2022, private rental prices increased by 4.2%. This marks the largest annual percentage change since January 2016.

Potential buyers affected by increased mortgage rates

Increasing house prices were also accompanied by rising mortgage rates last year, as the markets reacted badly to the announcement of ex-chancellor Kwasi Kwarteng’s mini budget in September.

And although the average cost of a two-year fixed rate mortgage gradually decreased towards the end of 2022, it remained significantly higher than it would have been at the beginning of the year.

This is reflected in comments made by the senior personal finance analyst at Interactive Investor, Myron Jobson. He stated that mortgage rates remain at “levels not seen since the financial crash”.

As a result, potential buyers are facing an “affordability crunch” as they try to save for higher deposits in a bid to reduce the amount they will need to pay back in interest on a mortgage.

The impact on private renters

While property owners face rising mortgage rates, there has been a domino effect for private renters as landlords try to meet their rising costs by increasing rent prices.

This has created a vicious cycle as renters are spending more and more on rent, meaning they’re unable to save for a deposit to buy their own property.

Dealing with property matters can be stressful at the best of times. But with the current uncertainty of the market, it’s become increasingly difficult to navigate.

Having a legal expert on your side can make all the difference. To find out how our specialist conveyancing solicitors could help you, give us a call or enquire online.