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Rising rent and mortgage costs leave households struggling

More than a third of British adults paying rent or a mortgage say these costs have risen in the last six months, and around a third also say that they are struggling to afford them.

Some 36% of adults making rent or mortgage payments said that these outgoings had increased in the last six months. This was according to our latest public opinions and social trends survey carried out between 8 and 19 March 2023.

That is an increase of 7 percentage points from 29% when we first asked this question between 3 and 14 November 2021.

Around a third (34%) of those making rent or mortgage payments also reported that they were finding it very or somewhat difficult to afford them. This was compared with 32% in the previous survey period (22 February to 5 March 2023).

The latest survey was completed shortly before the Bank of England announced that it would raise its interest rate from 4% to 4.25%.

The central bank’s decision is likely to lead to higher mortgage costs for some households and could also affect renters if buy-to-let landlords pass on higher costs to tenants.

You can use our Mortgage Calculator tool to see how mortgage repayment costs have changed around the country and enter your own inputs to personalise estimates for where you live.

House prices across the UK increased 6.3% in the year to January 2023, down from 9.3% in December 2022.

The average UK house price was £290,000 in January 2023. This is £17,000 higher than January 2022.

House prices grew the least in Scotland at a rate of 1.0%, which was lower than all regions of England and substantially lower than the rates seen across England (6.9%) and Wales (5.8%).

Private rental prices continued to grow at record high rates in all UK countries in the year to February 2023.

Overall, UK private rental prices increased 4.7% in the year to February 2023, up from 4.4% in the year to January 2023. This is the 10th consecutive month of record-breaking growth in UK rental prices.

Rental prices in Scotland increased by 4.9%, up from 4.5% in the previous month and the highest rate since records began in 2012. England and Wales also saw record growth in private rental prices, at 4.5% and 4.2%, respectively.

Privately renting tenants in England may have been more likely to have seen rental prices increase in the year to February 2023. Around half (50.6%) of privately rented properties revisited in February 2023 (median time between visits was 12 months) experienced a price increase. This is greater than the figure for the previous year, when 36.0% of properties revisited in February 2022 experienced a rental price increase.

Between 1997 and 2022, housing has become less affordable in every local authority, and the share of local authorities with an affordability ratio below 5 has fallen from 89% to 7%.

Affordability is calculated as the ratio of an area’s median house price to its median earnings. A lower ratio can be understood as greater affordability.

London was the region where privately rented properties revisited in February 2023 were most likely to have experienced a price increase since the last visit, at 66.8%. This figure was lowest in the North West, at 27.9%.

The average rental price percentage increase was highest in London (12.0%) and lowest in the West Midlands (8.2%) for properties revisited in February 2023 that had experienced a price rise since the last visit.

In 2022, a full-time employee in England could typically expect to spend 8.3 times their annual earnings buying a home in the local authority in which they work. This is lower than the ratio of 9.1 recorded the previous year. In Wales, this ratio was 6.2, which is not statistically different from the previous year.

Changes in house prices have been the primary driver of changing affordability. Although earnings have doubled in the past 25 years, house prices have increased by a factor of 4.5.

You can use our Mortgage Calculator tool to see how mortgage repayment costs have changed around the country and enter your own inputs to personalise estimates for where you live.