The ongoing cost of living crisis has been the foil to the positive signs coming from the recovering economy. There is some good news though as wage increases are set to overtake rent rises for the first time since 2009.
Rent costs are set to rise by 1.7% this year in comparison to 2.2% increases in wages. While this is not set to dramatically improve people’s lives it will relieve some pressure and there is a hope that this is a sign of things to come.
In comparison, only in 2012 did the country see rents go behind wages twice which saw financial worries spread across the country. Over a third of the UK’s homes are rented.
The effects are already starting to be felt with the amount of householders owing over 2 months rents dropping by 35% in a year. It is expected that rents will peak at 38.3% of average gross earnings come July.
David Newnes, director of estate agents Your Move and Reed Rains, said: “This year the squeeze on living standards is finally abating. Households have withstood half a decade of bombardment from weak earnings, inflation and a general spectre of gloom. We’re still some way from the finish line but for now things can only get better.”
The population has increasingly been pushed towards renting due to the surge in house prices over the last 13 years. Many struggle to get into the housing market and, since 2001, the number of homeowners under 35 has fallen by 41%.
Image by Quentin Matsys.