The Office for National Statistics (ONS) has shown an increasing number of individuals are finding it tough to keep up with their rent or mortgage payments.
The ONS’s latest bulletin on ‘Public opinions and social trends’ shows a stark reality — 40% of adults who are either renting or paying a mortgage find these payments challenging to afford. This figure is a significant leap from the 30% reported during a similar period last year, and an even steeper climb from the 45% noted last month.
Delving deeper, the data uncovers that nearly half (47%) of those with rent or mortgage commitments have seen their payments swell in the last half-year. This rate of increase is markedly higher compared to the 33% reported just a year prior.
Private Rent Prices Soar to Unprecedented Highs
The financial strain on renters is further compounded by a relentless climb in private rent prices. The ONS notes an extraordinary surge in these rates over the year leading up to August 2023. England experienced a 5.4% hike, while Wales and Scotland faced even steeper rises at 6.5% and 6.0%, respectively.
“UK private rental prices jumped by 5.5% in the year to August 2023, a rise from 5.3% in the 12 months to July 2023. This spike is the most pronounced annual percentage change since the UK data series first kicked off in January 2016,” an ONS spokesperson explained.
Particularly in London, where nearly one-third of the UK’s rental expenditure is concentrated, private rental prices skyrocketed by 5.9% in the 12 months to August 2023. This increase is not just above the average for England but also the steepest annual rate recorded since the ONS began tracking this data.
House Prices: A Mixed Bag
On the homeownership front, the landscape appears varied. The provisional average house price across the UK stood at £290,000 in July, a slight £2,000 increase from a year ago, but £2,000 shy of the peak witnessed in November 2022.
England saw house prices tick up by 0.6% in the year to July 2023. In contrast, Scotland’s annual house price inflation was more tepid at 0.1%. Wales witnessed a reversal, with property prices dipping by 0.1% over the same period.
Regionally, the North East took the lead with the highest annual house price inflation in England at 2.7%, although this was a cooldown from the 5.7% inflation reported in the year to June 2023. Despite this rise, the average house prices here remain the most modest among all English regions, averaging £163,000.
Conversely, the South West recorded the most lackluster performance, with house prices retracting by 1% over the year to July 2023. London joined the South West as the only other region witnessing a dip in prices.
Burdening Mortgage Payments
The Pay.UK and Vocalink data indicate that average monthly mortgage payments have been on an upward trajectory, climbing from £718 in December 2021 to £880 in September 2023. Alarmingly, the proportion of mortgage payments made by Direct Debit that bounced due to inadequate funds hit the highest level last month since May 2023.