- Average house prices rose 2% in the 12 months to June to £272,000 (source: Private rent and house prices, UK: August 2026 - GOV.UK)
- They rose fastest in the North West (up 4.7%) and fell in London (down 2.5%)
- Average monthly rents increased by 3.7% in the 12 months to July, to an average of £1,393 – up from 3.3% a month earlier
- Rents rose the fastest in the North East, up 6.3%, and slowest in the South East, up 2.9%
Sarah Coles, head of personal finance at AJ Bell, comments:
“A slow start to the summer put the brakes on house price rises. The pace of growth slowed to 2% in the 12 months to June - down from 3% a month earlier. Newer indices indicate things may not have got any better as the summer wore on, so we could see price rises decelerate even further.
"Affordability is a serious concern for buyers, with house prices high and mortgage rates creeping up. Meanwhile, instability in the wider world, and uncertainty caused by a change of leadership in the UK has led some to question whether now is the time to take the plunge. House prices are falling in London for the tenth consecutive month, which exacerbates the problem. It persuades more buyers to drive a harder bargain, and more to postpone a purchase in case they drop further, increasing the likelihood of further price falls.
"It’s a useful reminder for anyone considering investing in property that there will be years when your investment doesn’t keep pace with inflation. It’s easy to think we understand property because we live in it, but it’s a very different beast as an investment. Not only can prices fall in real terms, but if you have a mortgage, the impact of the drop will be magnified.
"At the same time, income can be unreliable from property investment. You need to plan for unexpected maintenance costs, the cost of meeting the demands of new legislation, potential periods with no tenants, problems with tenants, and tax. The fact that next April will see taxes on property income rise two percentage points is a reminder of how things can change.
Steady rent rises
“Rents were up 3.7% in the year to July – up from 3.3% a month earlier, largely because properties are thinner on the ground rather than any surge in demand from tenants. Separate data from Rightmove showed that the number of rental properties available in the late spring and early summer was 1% below where it was a year earlier – this was the first drop since 2022.
"It reflects the fact that life is getting tougher for landlords. It’s not just rising mortgage rates and the impact of the Renters’ Rights Act. There’s also additional tax on rental income on the cards and legislation around energy efficiency on the horizon. Many are deciding to vote with their feet and sell up. The fact that rents can’t be accepted over the asking price anymore has also led some to advertise lettings at the highest possible price, leading to a one-off bump in rental prices.
"Affordability is keeping a lid on rent in the south of the country, so rents rose 2.9% in the South East and 3% in London. It’s hardly surprising given that the average rent is £1,419 and £2,317 respectively. There comes a point when the cost is unaffordable for so many people, that there’s not enough demand to justify rent hikes. By contrast, prices are rising faster in the North East - up 6.3% over the year, followed by the North West at 5.7% and Yorkshire and the Humber at 5%. These increases are well ahead of wages, making rents tougher to cover.
"The higher rents rise, the harder it becomes to save a deposit for a home of your own. It’s why it’s worth getting any help you can - whether that’s from the Bank of Mum and Dad or the government bonus from a Lifetime ISA. If time is on your side, you can invest that money too, so your deposit has more opportunity to grow over the longer term.”
