House price indexes are a great way for investors and developers to understand the property market. The Office of National Statistics (ONS) have now provided an index of private housing rental prices, though, giving more insight into what to expect from property investment.
Private rental prices on the up
The index for private rental prices looks at how much tenants have paid private landlords over the past 12-months, focusing on the increase or decrease in rent prices over that period of time.
Over the last 12-months, private rental prices have increased by 2.4% within Great Britain. A figure that has remained consistent for the past year, with private rental prices increasing year on year since 2010.
Private rental prices in England rose by 2.5% over the past 12-months. This is compared to 0.1% falls in rental prices for Scotland and Wales. Countries where house price growth has been lagging compared to England.
Where private rental prices are on the up
If you were looking for a good property investment within the UK, you wouldn’t look much further than London. Private rental prices in the capital are, as to be expected, one of the fastest rising within England.
Over the last 12-months, London rental prices have increased by 3.0%. While this figure is one of the highest within England, surprisingly it is not the fastest growing market.
Private rental prices in the South East of England are growing at an annual rate of 3.4%. This is the highest price change within England, showing the power that London and the South East hold over the property market.
What it all means for developers and investors
Private rental prices in England are pushed forward by the South East of England and London in accordance with house price growth. (see our July article on UK house price growth)
Supply is still heavily outweighed by demand within London and the South East. This is heightened by the need for families to base themselves close to the capital for work and convenience. This mentality of cracking-on through Brexit and its economic uncertainty has actually brought stability to the capital.
Developers continue to look towards London and the South East as the ‘safe bet’ going forward. A city which offers such economic power globally isn’t going to stop being a hive of activity.
You can find the full index here.