(Bloomberg) -- London rental inflation eased to single figures for the first time in five months, though tenants still paid a record of almost £2,100 ($2,738.7) in June.
The average price of renting a private home in the UK capital rose 9.7% in the 12 months to June, the Office for National Statistics said on Wednesday. London rents were up 0.6% month-on-month, the smallest increase since November.
The slowdown brings some relief for tenants squeezed by both sky-high rents and a cost-of-living crisis in recent years. However, they are still facing painfully high costs as shortages of places to rent collide with strong demand from people priced out of the owner-occupier housing market.
London saw the fastest annual increase in England and the average private rent hit £2,098 per month, almost £350 higher than two years ago.
Monthly rental payments are still rising much faster than wages across the country. In England as a whole, they gained 8.6% in the year to June to £1,310 on average.
“The rental sector urgently needs investment to keep pace with demand,” said Nathan Emerson, chief executive of Propertymark, a trade body for estate agents.
“There has been much insecurity across the rental market over recent years due to aspects such as uncertainty surrounding the Renters’ Reform Bill, increases in taxes, and a lack of clarity regarding regulation,” he said.
Zoopla’s latest report on the rental sector showed that a mismatch between supply and demand is beginning to narrow. However, it warned that it “remains well out of kilter.”
Separate data from the Land Registry showed that average house prices were up 1.2% month-on-month to £285,201 in May.
It was stronger than house price indicators from the industry, which have shown continued high mortgage rates and affordability constraints hampering the property market recovery this year. The official measure, which includes cash buyers, lags indicators based on mortgage approvals as it tracks prices at the end of housebuying process.
Nationwide Building Society’s measure had prices rising 0.4% in May and 0.2% in June.
“This month’s increase is all the more impressive given that mortgage rates were rising over the first half of this year,” said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. “Forward-looking indicators like the RICS survey are also suggesting that further house price increases are likely to materialize in the coming months.”
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