UK housing market faces first annual price drop since 2012, sharp rise in rents: ONS

Official data released on Wednesday reveals that British house prices experienced an annual decline in September for the first time since 2012, signaling a notable shift in the housing market.

The Office for National Statistics (ONS) reported a 0.1 per cent decrease in house prices in the year to September, a stark contrast to the 0.8 per cent increase observed in August.

London, a key player in the housing market, saw prices decline by 1.1 per cent. This downturn comes after a period of robust growth during the COVID-19 pandemic, emphasizing the current challenges faced by the housing sector.

The impact of higher borrowing costs, attributed to the Bank of England’s efforts to tackle elevated inflation rates, is evident in the housing market’s weakened state. Major mortgage lenders, Halifax and Nationwide, reported continued declines in house prices on an annual basis in October, despite a slight monthly increase.

In addition to the dip in house prices, the ONS highlighted a sharp rise in private rents. The gauge of private rents increased by 6.1 per cent in the 12 months to October, marking the most significant annual surge since data collection began in 2016. This growth is a notable jump from the 5.7 per cent recorded in September.

Furthermore, recent data from the Ministry of Justice revealed a surge in no-fault eviction claims in England, reaching the highest level in over seven years. These claims, which allow landlords to terminate tenancies without specifying a reason and involve court proceedings when tenants resist vacating voluntarily, increased by 38 per cent in the three months to September compared to the same period last year.

While no-fault evictions were prohibited during the pandemic, the progress of the Renters Reform bill, aimed at implementing a permanent ban, has faced consistent delays. The dynamics in the housing market reflect the evolving challenges and uncertainties faced by both buyers and renters amid broader economic conditions.

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