Average UK rents hit record highs in London, as house prices drop – is it time for generation rent to move on up?

Rents across the UK are soaring at their fastest pace in years. New data from Rightmove reported that average rent for properties across Britain had hit new record highs, most notably in London, where the average rent now stands at £2,500 per month.

The market has reached a point where rents and mortgage payments are at similar levels. The government’s recent House Price Index indicates that the average price of a flat and maisonette has seen the smallest increase in value – a 2.9% growth – compared to other property types.

One would hope that this could mean that fist-time buyers could be a position to take advantage of the market conditions and get on the housing ladder.

Unfortunately, house prices for first-time buyers, especially for younger people, are still very high. For a 38sqm 1-bed flat in London, prices start at £276,000. In our estimation, it will require household incomes from £55,500 (with a deposit of 10%) to £49,200 with a deposit of 17% to be considered affordable.

Unless house prices are pegged at median incomes, the chances of younger people owning a home will only become a reality for a minority of people. Those lucky few whose family can help them, or they have one of the few higher paying jobs, or are in stable enough relationships to bring their household incomes to the required threshold. Not nearly enough to make a meaningful difference.

There are ways of addressing affordability but we will need changes to the way we deliver homes (planning reform, more efficient construction methods, improved financing opportunities and support) to be able to implement them.