England, Wales, Scotland & Northern Ireland
UK Housing News
London house prices have fallen at the fastest rate since 2011 - is this now the best opportunity to end the cycle of rent for Generation Stuck?
UK house prices fell at the fastest pace in more than a decade in November, driven by a sharp decline in London, according to official data that reflects the impact of high-interest rates on the property market. Average prices contracted 2.1% in the year to November 2023, compared with a 1.3% fall in the 12 months to October and the largest annual drop since June 2011, the Office for National Statistics said on Wednesday. House prices were also down 0.8% between October and November, taking the average property to £285,000, some £6,000 lower than in November 2022. London, furthermore, was the worst-performing UK region, registering a 6% annual contraction, the biggest since 2009, yet the capital remains the most expensive part of the country with the average home costing £505,000.
Overall, this will come as welcome news for Generation Stuck – those currently unable to buy a home and leave the rental market – with data from Cornerstone Tax – the UK’s leading property tax experts – revealing that a staggering 42% of renters fear that they will be stuck renting of the rest of their lives. David Hannah, Group Chairman of Cornerstone, highlights that whilst clear affordability issues remain in the housing market, this considerable fall, alongside interest rates reaching a potential peak, could mean that there is a glimmer of hope on the horizon for those currently stuck in the perpetual cycle of renting.
Adobe
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19% of Brits have experienced having to change rental properties more than five times in five years because of landlords and not through any fault of theirs
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17% of Brits say that they have lost out on a property they wanted to rent in the last two years due to a bidding war
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15% of Brits say that as a buy-to-let landlord, they are selling up due to rising costs of their property.
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18% of Brits say they were about to become a buy-to-let landlord, but the increased rules and regulations dissuaded them from doing so
Cornerstone’s research report highlights the dire need for change in the rental market, which has been marred by rising prices and increased competition. Notably, 17% of Brits report losing out on their desired rental properties due to bidding wars within the last two years. The situation is also desperate for those who are lucky enough to secure a property, with a staggering 19% of Brits saying they have had to change rental properties more than five times in five years because of landlords and not through any fault of their own.
The escalating cost of renting has been a significant driver of change in the rental market. The average rent for newly let properties now stands at £1,304, a figure exacerbated by soaring interest rates and landlords passing on their escalating expenses to tenants. As a result, 15% of buy-to-let landlords have decided to exit the sector, as revealed by Cornerstone's research. They cite the mounting costs as a primary reason for selling their rental properties. Furthermore, the survey uncovers that 18% of potential buy-to-let landlords have been discouraged from entering the market due to increased regulations and rules. This growing reluctance of buy-to-let landlords to enter the market will only serve to exacerbate the supply and demand issues which are currently causing upward pressure on prices and bidding wars due to the lack of stock.
Group Chairman of Cornerstone Tax, David Hannah comments:
“The relentless surge in interest rates by the Bank of England recently severely compromised the affordability of mortgages and affected buyers' spending capacity. Yet, amid this challenging landscape, today’s report from Halifax may provide those stuck in the rental market with a glimmer of hope. The Bank of England's announcement that we may have reached the zenith of interest rates, alongside the biggest fall in house prices seen in 14 years, may suggest that affordability issues could subside towards the end of the year and early 2024. So, while the road ahead may seem uncertain, it's important to remember that even in the face of a challenging market, the property market can adapt and rebound, offering opportunities for those who remain vigilant and strategic.”
David Hannah, Group Chairman
