Halifax House Price Index: Torment for tenants as prices race away – comment from Hargreaves Lansdown

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the publication of the Halifax House Price Index, showing torment for tenants as prices race away.

Key points from publication:
  • In June, house prices were up 13% in a year, to a record high of £294,845.
  • House prices haven’t risen this fast since late 2004.
  • Meanwhile, rents are up 11% in a year (Zoopla).
  • Renters saving for a 10% deposit would have had to raise an extra £1,885 since January, just to stand still.
  • Renters are less financially resilient on almost every measure than their homeowning counterparts (HL).
Sarah Coles says:

“There was more torment for tenants in June, as prices raced away for a 12th consecutive month. Those left behind by rising prices, are faced with the double-whammy of desperately trying to boost their deposit, at the same time as paying ever-increasing rents. Zoopla figures show new rental costs are up 11% in a year, and the longer it takes renters to hit their savings target, the more they’ve seen prices rise out of reach.

“The level of demand has now dropped back to roughly where we were before the pandemic, but the fact that so few properties are available is keeping prices high. Eventually the reality of rising prices will take its toll on confidence and cool the market, but we’re not there yet, and renters are paying the price.

“The sheer pace of price rises are impossible to match with super-fast saving, Since the beginning of 2022, house prices have risen £18,849, so just to stand still, renters saving for a 10% deposit would have had to add almost £1,900 to their savings pot. Given the fact that hikes in the cost of everything from food to fuel have been unbearably painful since the start of the year, this is an impossible challenge.

“Rising prices may make homeowners feel wealthier, but they’re pushing renters further into the mire. Almost a fifth of people rent privately (19%), and a similar number live in social rented housing (17%), so more than a third of people are  facing unbearable pressure as prices rise.

“The HL Savings and Resilience Barometer, produced with Oxford Economics, shows that renters are less financially resilient on almost every measure than their homeowning counterparts. They have less money left over at the end of the month, less in emergency savings, they’re more likely to be in arrears with bills and debts, and they’re not on track for retirement. It’s hardly surprising given than keeping a roof over their head costs so much more than it does for those who own their own home.

“So while homeowners will be keeping their fingers crossed for a gentle tapering of house prices, and a return to more sedate price rises, there will be renters who can’t help hoping for prices to back off, to at least give them a chance of getting out of the rental cycle and taking a breather on the bottom rung of the housing ladder.”

 

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay