PEARL Rental Index – April 2018

by | Apr 18, 2018 | Blog post, Rental Index

PEARL Rental Index

We have rounded up all of the latest housing statistics, rental index updates and data on renting from across the sector and compiled them into one easy to digest bulletin. Headline findings:

  • Rental price growth weakening for Great Britain, with the latest rental index showing rents had increased by 1.1% in the 12 months to March 2018
  • Average house prices in the UK have increased by 4.4% in the year to February 2018
  • London house prices decrease by 1% in the year to February 2018
  • Consumer Price Index inflation now at 2.5%
Index of Private Housing Rental Prices (IPHRP)

The latest Index of Private Housing Rental Prices (IPHRP) shows that private rents increased in Great Britain by 1.1% in the 12 months to March 2018. This figure remains unchanged on the previous month and is down from 1.8% for the year to August 2017.

Across Great Britain there were varying rental price changes in the 12-month rate to March 2018:

  • England rental prices grew by 1.1%
  • Wales rental prices grew by 1.2%
  • Scotland rental prices grew by 0.7%
  • London rental prices grew by 0.1%

The findings of the rental index is showing that rental price growth is still subdued for Great Britain, England and London. While rental price growth saw strong strengthening in 2017 this has now fallen slightly. In Scotland, rental price growth has weakened since June 2015 and has remained around 0.2 – 0.4% growth since June 2017.

Growth in rents in London has decreased significantly over the past two years, in November 2015, growth was at 4.1%, it is now 4 percentage points below this figure. London rental growth is 1 percentage points below rental growth in Great Britain and is unchanged from the previous month. If this trend continues, we could expect rental growth to turn negative in the next few months.

At a regional level in England, the regions with the most substantial increase in rents to March 2018 were:

  • East Midland rental prices grew by 2.7
  • South West rental prices grew by 2.1%
  • East of England rental prices grew by 1.9%

The regions with the lowest annual increases in rental prices were:

  • London with rental growth of 0.1%
  • North East with rental growth of 0.2%
  • North West with rental growth of 1.2%
Consumer Prices Index (CPI)

The Consumer Prices Index 12-month rate was at 2.5% for March 2018. This was down from 3.1% in November 2017. In comparison to rental growth and the IPHRP rental index for Great Britain, inflation was 1.4 percentage points higher than private rental growth.

House Price Index

In the year to February 2018, average house prices in the UK increased by 4.4%. UK house price growth has been slowing since June 2016, where it was 8.2%.

Growth in UK house prices was contributed mostly to growth in England. Across the UK, house price change for the year to February 2018 was the following:

  • England house prices grew by 4.1%, with the average house price now at £242,176
  • Wales house prices grew by 4.8%, with the average house price now at £152,891
  • Scotland house prices grew by 6.2%, with the average house prices now at £144,377
  • Northern Ireland prices grew by 4.3%, with the average house prices now at £130,482

In England, the strongest regional house price growth in the year to February 2018 was in:

  • West Midlands (7.3%)
  • East Midlands (6.3%)
  • South West (4.9%)

The weakest house price growth was in London at -1%, followed by Yorkshire and The Humber at 3.1%, and then followed by the North East at 3.3%.

The region with the highest average house value for February 2018 was London at £471,986, followed by the South East at £322,489, and then the East of England at £288,468. The region with the lowest average house value for February 2018 was the North East at £128,218.

The property type that has experienced the greatest price growth was Detached properties at 5.6% for the year to February 2018, with the average house price at £342,954. The property type with the weakest price growth was Flat or maisonette at 1.8% for the year to February 2018, with the average price at £201,657.

House Sales

The latest data from the HM Land Registry is showing that house sales have continued to decrease in comparison to the previous year. In England, house sales were down 21% in December 2017 in comparison to the previous year. A decrease in house sales was also evident in Scotland and Wales, at 5% and 14% respectively. Showing a decline in housing transactions across the country.

Average Weekly Earnings

In the year to February 2018, Average Weekly Earnings (AWE) Regular Pay increased by 2.9%, with average weekly earnings now at £483.

Buy-to-Let Mortgage Activity

Buy-to-let lending in February declined 8.8% for new purchases year-on-year. Remortgaging is currently driving buy-to-let lending activity, with 14,100 remortgages in February 2018, this is 20.5 percent up year-on-year. Overall, this shows that the number of buy-to-let mortgages for new house purchases has not recovered from the Stamp Duty changes, and are well below the figure for May 2013 (at 6,900).