Asking rents across the UK have fallen 4.1% over the past year, adding downward pressure to home prices as property investors face deteriorating market conditions on multiple fronts.
All English regions, Scotland and Wales now show year-on-year declines in mix-adjusted average asking rents, according to Home.co.uk's House Price Index for January. The East Midlands recorded the steepest drop at 12.5%, while 18 of London's 33 boroughs indicate negative asking rent growth.
The rental decline compounds challenges for property investors already contending with falling capital values in real terms. This pincer movement on returns has prompted gradual capitulation among "hold on and hope" stalwarts, with many now willing to accept losses to exit the market quickly.
Home.co.uk found that "prices are soft and sliding because many investors are willing to take a hit if it allows them to cash out quickly and turn to other, more profitable markets. The sense of urgency is palpable."
The UK property market stands at a critical juncture, with overall growth trending toward zero and possibly below. Confidence has ebbed even among seasoned property bulls, while prospective buyers face a market where valuations continue to slide.
Vendor numbers rebounded during December following November's hesitancy. Twenty per cent more properties were placed on the market than in December 2024, with the largest surges in new sales listings appearing in Scotland, the North East, East Midlands and the North West.
Stock levels have reached their highest point for many years. While total unsold stock on the market has decreased over recent months, the current total represents the highest January figure since 2015. Seasonal expectations indicate a rapid rise over the next six months, creating a persistent oversupply that will not improve anytime soon.
Pricing remains subdued as agents price to sell in an increasingly challenging market. Home prices in England and Wales stand just 0.5% higher than in January 2025. The mix-adjusted average slipped in Wales, Scotland and all English regions except the North East, which gained 0.7%, the North West at 0.3%, and Greater London at 0.4%. The East of England indicated the largest month-on-month decline at 0.8%.
Despite December's interest rate cut, mortgage rates remain too high for demand to absorb the slack. For prospective buyers, caveat emptor must be taken seriously as valuations slide in a market tilting decisively toward purchasers.
Regional performance varies considerably. The North East has become the top property market growth leader with a year-on-year gain of 2.7%, pushing the North West into second place. London remains the worst regional performer with an annualised decline extending to 1.0%.
Typical time on market for unsold properties continues rising overall, currently sitting five days higher than in January last year. The worst increase in marketing times appears in the South West, where prices are correcting accordingly.
In London's rental market, Kensington and Chelsea represents the slowest market with properties taking 49 days to let on average. Asking rents in this borough have fallen 6.9% over the past twelve months.
The combination of rising stock levels, extended marketing times, falling rents, and subdued pricing creates conditions increasingly favourable to buyers. However, the deteriorating fundamentals suggest caution for anyone considering entry to the market, particularly investors seeking rental income alongside capital appreciation.
