Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments said: "In a surprising twist, the UK housing market is showing signs of divergence, with house prices showing signs of cooling while the rental market continues to surge ahead.
"Despite a combination of competitive mortgage products and the potential for further interest rate cuts, this slight deceleration suggests that the post-pandemic housing boom may be finally running out of steam.
"However, while homeowners may be breathing a sigh of relief at the moderating price growth, tenants are finding little respite.
"This continued strength in the rental market can be attributed to a perfect storm of factors, with a squeeze on mortgage affordability pushing potential buyers into renting.
"Furthermore, as Chancellor Reeves sharpens her fiscal scalpel with landlords on the cutting block, a mass exodus from the rental market has already begun.
"Against this backdrop, the impact could be devastating, with the cost-of-living crisis making it harder to save for deposits, trapping many in a rental spiral."
Iain Swatton, director at Exemplar Financial Services commented: ""Rents are finally showing signs of cooling off, even in hot spots like London, with growth slowing from 8.6% to 8.4%.
"This stabilisation, along with a slower rise in house prices, suggests the market is starting to balance out.
"While challenges remain, it’s encouraging to see signs of relief for both renters and buyers, signalling a more positive outlook for the housing and rental sectors.
"That said, with today’s inflation announcement, an interest rate cut may not be on the cards just yet, but the market is moving in the right direction."
Aman Bajwa, director and co-founder of Fairbridge Capital, said: “Today’s figures reveal that the property market has shrugged off the summer lull, and is showing no signs of slowing down, as we enter what is traditionally a busier period. Investors are getting back into the property market as interest rates fall, with several sub-4% five-year mortgage deals now available; this, paired with lower inflation, is fuelling demand.
“With rents increasing faster than house prices, and rumours that the base rate could hit 4.5% before the end of the year, activity shows no signs of stopping either.
“Landlords who haven’t expanded their businesses over the turmoil of recent years are re-entering the market, and new landlords are making their first foray into property investment.
“To maximise opportunities in the BTL space, flexibility will remain critical. Specialist lenders can help customers get access to finance exactly when they need it, to give them the best chance possible of making a successful investment.”
Alex Upton, managing director for specialist mortgages at HTB, stated: “Rents have continued to rise sharply, reflecting the ongoing shifts in the rental market landscape. With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing.
“While more landlords are bringing properties to market, tenant demand is still outstripping supply; this imbalance is likely to push rents higher as we move forward.
“Rather than a mass exodus, what we’re seeing is a refinement of strategy among professional landlords who are keen to adapt to the evolving market. There’s growing interest in more specialist, higher-yielding investments — such as HMOs or semi-commercial properties — that can provide a better return on investment. Landlords are looking for ways to diversify and strengthen their portfolios, and they’re increasingly open to exploring different property types to achieve that.
“With the budget approaching, there’s a lot of speculation about potential changes that could affect landlords. I’d like to see a focus on positive measures that encourage continued investment in quality rental housing and support the professional landlords who are committed to providing high-standard homes.
“The PRS is crucial to meeting housing demand, and it’s essential that we don’t lose sight of that.”
“The rental market continues to operate with a very strong headwind, as many landlords battle increased overheads and uncertainty regarding future legislation,” commented Nathan Emerson CEO at Propertymark.
“Landlords have faced a complex combination of high inflation, interest rates, maintenance costs and a more demanding taxation structure over the last few years. In turn, this has had a profound impact on their ability to operate and in some circumstances has forced good landlords to make the difficult choice to sell up and leave the sector.
“To keep rental costs across the UK sustainable, Propertymark is keen to see a progressive approach to future housing strategy and a plan that encourages long-term investment.
“With an ever-growing population, it is imperative that supply keeps up with real-world demand and that future planning carefully considers key regions where demand is most prevalent."
