UK housing rental prices spiked by a record rate with London hit particularly hard, official data showed Wednesday, stoking a cost-of-living crisis as inflation remains elevated despite a sharp slowdown.
Private rents leapt 6.1 percent in the 12 months to October, which was the highest annual percentage change since comparable records began in 2016, the Office for National Statistics (ONS) said in a report.
In the British capital, rents surged 6.8 percent — the biggest annual rate since London records started in 2006.
Renting prices have steadily risen since mid-2021 as the economy re-opened from Covid lockdowns, further fuelling a nationwide squeeze on living standards.
“The rise in rental prices continues to accelerate across the country, with Wales, London and Scotland seeing the biggest annual increases,” said ONS head of housing market indices Aimee North.
At the same time, British Consumer Prices Index (CPI) inflation slowed sharply to a two-year low of 4.6 percent in October from 6.7 percent in September, separate ONS data showed.
The reading does not reflect the surge in the cost of housing rents.
UK inflation also remains the highest among the G7 rich nations and is more than double the Bank of England’s official two-percent target.
The BoE has implemented a series of aggressive interest-rate hikes since late 2021 in a bid to tame consumer prices.
Yet those rate hikes have worsened the cost-of-living crisis because retail banks have then increased the cost of repayments on mortgages, hampering the property market.
As a result, house prices in Britain have fallen annually for the first time in a decade, the ONS also revealed on Wednesday.
The average UK house price dipped 0.1 percent in the 12 months to September. That marked the first annual decline since April 2012.
The value of a typical property stood at GBP291,000.
However, Wednesday’s inflation news raised hopes that the BoE could decide to reduce its key interest rate from the current 15-year high of 5.25 percent.
That in turn would stimulate activity in the housing market.
“The latest fall in inflation… will further boost hopes that interest rates could soon start to drop and entice more buyers to the market,” said Nicky Stevenson, managing director at estate agent group Fine & Country.