Wage Growth Returns After a Decade of Stagnation

Figures from the Office for National Statistics show that wages are finally on the rise after nearly a decade of stagnation. Compared to the previous year, wages excluding bonuses increased by 3.2%—the highest growth rate since late 2008. This is positive news for workers across the UK.

Rising Rents Across the UK

Despite the positive wage growth, renters are facing increasing costs. HomeLet reports that the average rent outside London rose by 1.7% in the year leading up to October, while in London, rents increased by 4%. This suggests that rising wages may not necessarily translate into better affordability for tenants.

Regional Variations in Rental Costs

HomeLet’s data reveals that the average UK rent hit £928 per month in October, reflecting a 2.1% year-on-year increase. Outside London, rents now average £768 per month, while in Greater London, tenants are paying an average of £1,543 per month. Surprisingly, rents in Northern Ireland and Scotland have risen faster than in London, with increases of 4.5% and 4.2% respectively.

Inflation vs. Rental Growth

Over the last decade, inflation has outpaced rent growth in most regions. The Consumer Price Index, which tracks the cost of goods and services, has increased more than rental prices except in the East of England and London, where rents have risen faster than inflation. Nationally, rents have grown by 22% in the past ten years, while inflation has increased by 24%.

Real Rental Growth: The Bigger Picture

Although London and the East of England have seen positive real rental growth, all other regions have experienced rental prices that lag behind inflation. In the East of England, real rents have risen by 7.5% in the last decade, while London has seen only a marginal increase of 0.5% since 2008. In contrast, other parts of the UK have seen rental prices become more affordable in real terms.

What’s Next for Renters?

Experts predict that inflation may begin to slow in the coming months, allowing rental growth to pick up. As rents continue to fluctuate, tenants should ensure they get the best value for money. Whether flexibility or location is a priority, working with a reputable letting agent can help renters find a property that fits their needs and budget.