Private rental prices paid by tenants in Great Britain rose by 1.5% in the 12 months to October, but this was slightly down from 1.6% in September, according to the latest ONS figures.
In England, private rental prices grew by 1.5%, Wales also saw growth of 1.5% while Scotland saw rental prices increase by 0.4% in the 12 months to October 2017.
London private rental prices grew by 0.8% in the 12 months to October 2017, that is, 0.7 percentage points below the Great Britain 12-month growth rate.
The ONS figures also reveal that house Prices are up by 5.4% in the year to September, led by gains in the North West of England, where values are up 7.3%.
The average UK house price was £226,000 in September 2017, which is £11,000 higher than the corresponding month last year.
Graham Davidson, managing director of Sequre Property Investment, commented: “With house prices still rising steadily, we can see the market remains in a promising position as we near the end of 2017. An annual increase of 5.4% is generally the level of growth we have predicted we would see at this point in the year.
“Whilst the overall growth is of importance, areas such as the North West which we have been championing for several years now are far surpassing other parts of the UK with a huge 7.3% growth to September this year. London continues to take a dip with growth of just 2.5% which we also predicted at the beginning of the year.
“For buy-to-let investors, the message could not be clearer. If you want high yields and capital growth, the north is best to invest.”
According to the ONS, property prices in Northern Ireland rose by 6% in the year to September, followed by a 5.7% increase in England, a 5.3% rise in Wales, and a 3.1% hike in Scotland.
High house prices are leaving many would-be buyers with little alternative but to rent long-term. The latest mortgage data from UK Finance, which shows that 31,100 loans were advanced to first-time buyers in September, down 10% on the previous month and 1% on the same month a year earlier.
John Goodall, CEO and co-founder of Landbay, commented: “House prices showed no signs of slowing down in September as they continued on in their upward climb. Up until this point, a combination of low mortgage rates and high rates of employment have helped balance out the squeeze on household incomes from stagnant wages and rising inflation. However, last week’s rate rise signalled the start of raised borrowing costs for the first time in a decade which is likely to curtail buyer activity in the coming months.
“As the Budget draws closer, we hope to see some ironclad commitments from the government on its plan for tackling the growing demand for housing. There may be no quick fix, but now more than ever the private rented sector will be relied upon by those unwilling or unable to buy a house outright.
“Without a radical housebuilding plan for both first-time buyer homes and purpose-built rental properties, prices will continue to rise over the coming decades.”