UK Housing Market Shifts: Asking Prices Dip as Rental Growth Slows
UK house asking prices fell 0.10% annually, the first decline since January, with a 0.40% monthly increase below seasonal norms. Southern England's expensive properties drove the decline. Rental price growth slowed to 2.40% annually, a four-year low, with average monthly rents at £1,300. Zoopla projects 3.00% rent increase by year-end. These changes occur amid economic stagnation and expectations of maintained interest rates at 4.00%.
*this image is generated using AI for illustrative purposes only.
The UK property market is experiencing notable changes, with house asking prices showing a slight decline and rental growth hitting a four-year low, according to recent surveys by Rightmove and Zoopla.
House Asking Prices: A Subtle Decline
Rightmove's survey, covering the period from August 10 to September 6, revealed that UK house asking prices fell by 0.10% annually. This marks the first annual decline since January, despite a 0.40% monthly increase which fell below seasonal norms following three consecutive months of declines.
The decline in asking prices was primarily driven by homes in southern England, typically more expensive properties that are particularly sensitive to potential property tax changes. The property market has been grappling with uncertainty since mid-August due to speculation about property tax modifications, affecting market activity, especially in higher price brackets.
Rental Market: Growth Slows to Four-Year Low
In parallel, the rental market is also showing signs of cooling. A separate survey by Zoopla indicated that rental prices increased by 2.40% annually in the four weeks leading up to September 2. This represents the lowest growth rate in four years, with average monthly rents now standing at £1,300.
The slowdown in rental price growth can be attributed to several factors:
- Lower migration
- Improved mortgage availability for first-time buyers
- Reduced competition for rental properties
Despite the slowdown, Zoopla projects that rents will rise by 3.00% by the end of the year.
Economic Context
The property market shifts are occurring against a backdrop of economic stagnation. The UK economy showed no growth in July, following a 0.40% expansion in June.
Looking ahead, the Bank of England is expected to maintain interest rates at 4.00% in its upcoming meeting on September 18. Market projections suggest that the next rate cut may not occur until spring 2026.
These developments in the housing and rental markets, coupled with the broader economic context, paint a picture of a property sector in flux. Potential buyers and renters alike will be watching closely to see how these trends evolve in the coming months.
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