Annual growth in UK house prices and rents has accelerated, with rental price inflation in England and London hitting record highs, according to official figures.
The average house price increased by 3.4% in the 12 months to October, ticking upwards from 2.8% in September, according to Office for National Statistics (ONS) data.
Across the UK, the average house price in October was £292,000.
Average prices increased in England to £309,000 (3.0% annual growth), in Wales to £222,000 (4.0%), and in Scotland to £197,000 (5.5%).
The average house price for Northern Ireland was £191,000 between July and September, up by 6.2% annually.
The report also showed annual growth in private rental prices accelerated to 9.1% in November, from 8.7% in the 12 months to October.
Annual growth in rental prices was just below a record rise of 9.2%, recorded in March 2024.
ONS head of housing market indices Aimee North said: “Rental prices climbed again in the year to November with the average private rent in Great Britain now around £1,300 per month.
“Average rent increases continue to be highest in London while annual rent inflation reached a record high for England.”
The average private rent in Britain was £1,319 per month in November – £110 higher than in November 2023.
In England, the average was £1,362 in November, up 9.3% (£116) from a year earlier.
Within England, rental price inflation was highest in London (11.6%) and lowest in Yorkshire and the Humber (5.7%) in the 12 months to November.
“The rise in London’s annual inflation was caused by two consecutive months of large rent rises, compared with smaller rises a year ago.”
The figures were released as the ONS said Consumer Prices Index (CPI) inflation rose to 2.6% in November, from 2.3% the previous month.
This is the highest rate since March and the second rise in two months.
Jason Tebb, president of OnTheMarket, said: “Two interest rate reductions in recent months have had a positive knock-on effect on confidence, which the market relies on.
“The unwelcome news that inflation has edged upwards to 2.6% is not surprising but still a blow as it may well encourage the Bank of England to delay further rate reductions.
“Affordability remains a challenge but the market continues to tick along, with focused buyers who may have put plans on hold welcoming lower mortgage rates.”
David Hollingworth, associate director at L&C Mortgages, said: “Any hopes for a further cut to base rate to come tomorrow look to have been dashed already by yesterday’s strong pay growth figures.”
He added: “Mortgage borrowers shouldn’t expect to see much change because of today’s figures. Further base rate cuts are expected next year but the Bank of England has played a consistent line that those reductions are more likely to be slow and steady in pace. The figures today do nothing to suggest that line is about to change.
“Mortgage rates had edged higher in recent months after concerns over greater inflationary pressure being exerted by the measures announced in the Budget.
“Those increases have calmed as the market has found its level and an increasing number of lenders have been able to make some reductions to fixed deals. This has helped to nibble away at fixed rates rather than slash them and I’d expect more stability in rates as we head into the festive period.”
Jeremy Leaf, a north London estate agent, said: “The removal of the stamp duty concession at the end of March is fuelling some more first-time buyer activity which will have a positive impact on the rest of the market by helping to connect chains.
“However, the prospect of mortgage rates, as well as now inflation, staying higher for longer will mean no more than a steady improvement in activity in early 2025.”
Nick Leeming, chairman of estate agent Jackson-Stops, said: “Whilst there is an understandable focus on enabling first-time buyers to get on to the property ladder from the industry, attention must also be paid to older homeowners to incentivise downsizing and improve market fluidity.
“As well as downsizers and first-time buyers, we expect to see more buying decisions being motivated by the strong competition for school catchment areas following wider policy changes.”
