Higher rents and mortgages raised housing costs by £20bn, says Savills

Savills' research chief says higher rents plus soaring mortgage rates pushed up housing costs to over £200 billion, forcing many cash-strapped consumers to tighten belts.

Lucian Cook, Savills

UK housing costs hit £200 billion last year as strong rental growth and higher mortgage rates began to take their toll on the residential property sector, research by Savills reveals.

Its analysis shows rising rents plus soaring mortgage rates pushed up housing costs by £22 billion while cash-strapped consumers were forced to tighten belts. And in the last two years the nation’s housing costs have risen by a whopping £34.3 billion – three times that seen in the preceding five.


Lucian Cook (main picture), Head of Residential Research at Savills, says: “The increase in housing costs has been unevenly distributed, with more younger households immediately affected by the rise in rental costs with many owner-occupiers on fixed rates remaining insulated from the turbulence seen in the mortgage markets.

Although fixed rates have eased back recently the delayed impact of rate rises will mean further increases in the nation’s housing costs in 2024 as more homeowners come off fixed rates, putting a further squeeze on household budgets.”

Savills reckons around 1.2 million more borrowers will roll off relatively cheap fixed rate mortgages in 2024. Although at the same time the number of older households owning their home outright will also continue to rise, hitting an estimated 9.57million in 2024 across the UK.


Cook adds: “Homes to rent were in short supply in 2023 and demand high. This, combined with robust wage growth, fuelled an unusually high increase in the housing bill faced by tenants in the private sector.

“While it’s difficult to see where an increase in rental supply will come from, rents in the private rented sector appear to be rapidly approaching an ‘affordability ceiling’.

“This should slow the rate of growth but renters will still be left spending a larger proportion of their income on rent than at any point in the last 18 years.”

Table showing increase in mortgages versus renters.
Source: Savills Research

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