The cost of renting a flat in the UK has reached record heights with the average monthly asking price at £833 per month, the highest on record and 2.5% above prices this time last year.
The cost of a studio flat has risen to £713, 5.9% greater than this time last year and 8.5% more than the current cost of renting a one bedroom flat, the latest rental index from FindaProperty shows.
Despite being cheaper to rent than a studio, monthly asking prices for one bedroom flats are also at their highest, averaging £657, which is up 3% on this time last year. This is not the case however for two bedroom flats, which saw asking prices fall 0.1% last month.
This trend is also mirrored in UK property sales market, where asking prices experienced the largest month on month increase ever recorded by the index. Average asking prices for UK properties increased by £1,072, 0.5%, between January and February, to stand at £219,186. At present, asking prices for flats in the UK are at their highest since January 2009, averaging £176,645.
Asking prices for first time buyer properties also increased by 0.5% in February to £154,199. Affordability for first time buyers improved again this month and is now at its best level since this index was started in December 2007, driven by increases in the mortgage multiples offered by banks to first time buyers. The average deposit required fell by £1,489 to £47,467, some 1.47 times the average annual wage.
The index also shows that the number of properties coming onto the market increased by 1.2% in February after a slow start to 2012.
London saw the biggest month on month increase in sales asking price of 2.2%, the highest month on month increase in June 2009. But the North East of England saw the biggest month on month fall of 2% falling from £148,121 in January to £145,135 in February.
‘Rental tenants looking for smaller, less expensive accommodation are coming under increasing financial pressure as demand drags the price of these sought after properties upwards. The rental sector as a whole is growing and very healthy, but competition for flats is stronger than ever,’ said Samantha Baden, property analyst at FindaProperty.
‘The fact the market for property sales demonstrates similar movements show that people are looking to flats as a more affordable alternative to larger houses, particularly if they are reluctant to compromise on location. The property market is challenging at the moment, and as a result buyers’ expectations of what they can realistically afford are changing,’ she added.