- House prices rose 0.7% between March and April (source: Private rent and house prices, UK – Office for National Statistics)
- They were up 3.8% in a year – largely because of market distortions a year earlier
- Average monthly rents increased by 3.3% in the 12 months to May, to an average of £1,383
- Rents rose the fastest in the North East, up 5.9%, and slowest in London, up 2%
- US-Iran peace deal raises the prospect of lower-than-expected inflation and lower fixed rate mortgages
Sarah Coles, head of personal finance at AJ Bell, comments:
“Hats off to the property market for its resilience in April. It may not be charging ahead, but it’s treading water in fairly rough conditions. The annual rise of 3.8% isn’t as good as it looks, because it’s distorted by a sharp fall a year earlier in the wake of the end of the stamp duty holiday. However, there was a reasonable monthly rise of 0.7%.
“Most of these buyers and sellers agreed sales before the war in Iran changed the environment significantly, but they did a decent job of clinging onto agreed sales and resisting price cuts in order to get these completions over the line.
“There’s every chance that things will look less rosy in the months to come, as the latest RICS data shows buyer numbers and agreed sales fell significantly through March, April and May, which is likely to have depressed prices. However, there may be light at the end of the tunnel, because the US-Iran peace deal could help things pick up when we start to get figures for the autumn, especially if lower inflation expectations lead to lower fixed rate mortgages.
“Some buyers will choose to sit tight in a market like this, to see what happens to prices. There’s always a risk in this, because it’s impossible to know the perfect time to buy until it has passed. However, if you’re playing the wait-and-see game and you have a Lifetime ISA, you should at least take advantage of the opportunity to make the most of this year’s allowance and the government bonus.
Rents rise again
“Rent rises slowed again in May, the latest drop in a downward trend that set in from December 2024. It’s good news for renters, but they’re still wrestling with the cumulative impact of rent rises over the past few years. In the UK, monthly rents averaged £1,383, while in London they cost an eye-watering £2,294 a month.
“The easing of runaway rent rises owes much to the fact that while the number of properties to rent has been falling, tenant demand has also dropped. In some cases, prospective tenants have been forced to live at home for longer, because sky-high rents have been pricing them out of the market. Meanwhile, the jobs market has been particularly challenging for younger people, so some are struggling to make a start, and some have been forced to move back home.
“However, the picture has shifted very slightly recently. Tenant demand has picked up a little in the past few months, and while it’s more of a steady flow than a flood, over time it could push rents up again. At the same time, costs are increasing for landlords so some might be tempted to sell up, while those who remain may increase the rents further.
“It means the pain may not be over for renters, making getting onto the property ladder even more rewarding. The easing of rent rises behind average wages could put you in a position to put more cash aside to take the leap, and if you use a Lifetime ISA you could boost your pot by up to £1,000 a year using the government bonus. If time is on your side, it could be worth considering investing that money into the stock market.”
