More misery for renters frozen off the housing ladder as average monthly payments are expected to jump by another 4%
Rents expected to rise twice as fast as house prices in 2013Cost of the average home will rise by a modest two per cent
09:12 GMT, 14 December 2012
Rents will rise twice as fast as house prices in 2013 as Britain’s embattled housing market endures another tough year, the Royal Institution of Chartered Surveyors will say today.
It expects the cost of the average home, currently 161,000, will rise by a modest two per cent next year – largely spurred by London and the South East – while the average rent will jump by four per cent.
Rents have already hit record highs as a generation of young people are forced into landlords’ pockets after being frozen off the housing ladder, but they will climb even higher.
Not so sunny outlook: Average rents will rise twice as fast as house prices in 2013, the Royal Institution of Chartered Surveyors will say today
The average monthly rent is 745, rising to 1,100 in London, according to LSL Property Services, the largest network of lettings agents.
RICS said house price growth will continue to be thwarted by the tough economic outlook, the lack of job security facing many workers and first-time buyers’ struggle to get a loan.
Simon Rubinsohn, chief economist at RICS, said there will be huge regional variation in the performance of house prices next year.
In recent years, the trend has been for house prices to rise sharply in London, rise modestly in the South East but to fall or tread water in other regions of the country.
RICS expects house prices will rise by around three per cent in London, except the ‘prime’ areas which will be ‘broadly flat’.
Mr Rubinsohn said: ‘The rest of the South East should also record a small gain in prices and our indicators are, significantly, also turning more positive in the North West region.
‘Most other parts of the UK will show a broadly flat trend in prices or post very modest declines.’ He said his predictions might be too optimistic, warning: ‘It would not be difficult to project a more negative outcome given the risks to the economy.’
Meanwhile, the struggle faced by many homeowners who want to sell their property will continue.
Costly: The average monthly rent is now 745, rising to 1,100 in London (pictured)
RICS’s forecast, published today, expects around 960,000 properties will be sold next year, which represents the strongest year since 2007, the year that the credit crunch began.
But this is far below the number of homes that used to change hands every year before the credit crunch struck. In 2007, 1.6million homes were sold.
Overall, the average cost of a home in Britain has fallen from a peak of 200,000 in August 2007 to 161,000 today, according to figures published by the Halifax.
But the fall could have been much steeper given the double-dip recession.
Mr Rubinsohn said: ‘The residential property market has demonstrated a fair degree of resilience over the past year given the lamentable performance of the British economy.’ The Halifax, which published its housing market forecast last week, also predicts very little movement in house prices next year.
Martin Ellis, housing economist at the Halifax, said: ‘We expect continuing broad stability in house prices nationally in 2013.
‘Prices are again likely to end the year at levels close to where they begin with the market continuing to lack any genuine direction.’ Last month, the average price of a home in the UK was 160,879, which is just 5 higher than it was in November 2011, according to the Halifax.
The Census showed 14.9million families in England and Wales own their own home last year. Of the total, 7.2million do not have a mortgage on the property.