The UK housing market is showing signs of recovery, with house price inflation at +1% in September 2024, a significant improvement compared to -0.9% a year earlier. This positive shift is driven by lower mortgage rates and rising incomes, leading to an increase in sales activity. The pipeline of sales is 30% higher than the previous year, valued at £113bn. However, house price inflation remains relatively subdued due to high home supply and affordability pressures. In some areas, house prices are rising faster, such as in Northern Ireland, the North East, and Scotland, while regions like the South East and Eastern England have seen slight declines.
2. How has the growth in house sales in 2024 compared to previous years?
2024 is shaping up to be a bumper year for house sales, with the level of activity reaching the highest point since the post-pandemic boom in 2020. The value of sales agreed is significantly higher than in 2023, when higher mortgage rates dampened demand. As of October 2024, the number of homes with sales agreed stands at 306,000, a 26% increase from the same period in 2023. The total value of homes in the sales pipeline has risen by 30% compared to last year, reaching £113bn, reflecting growing confidence among both buyers and sellers.
3. Who are the main buyers in the UK housing market in 2024?
First-time buyers (FTBs) have become the largest group of homebuyers in 2024, accounting for 36% of all sales. This is a significant shift, as FTBs are benefiting from lower mortgage rates and rising incomes, which have made buying more affordable compared to renting. Existing homeowners, particularly those who postponed their moves until borrowing costs fell, make up 31% of buyers. Cash buyers, many of whom are mortgage-free homeowners or investors, represent 27% of the market, while buy-to-let landlords account for 7%. The overall trend indicates a market increasingly driven by first-time buyers.
4. How have mortgage rates and rents impacted first-time buyers in 2024?
The reduction in mortgage rates has been a game-changer for first-time buyers (FTBs). In 2024, mortgage repayments for a typical FTB home are on average 17% cheaper than renting, compared to a minimal difference of just 2% in 2023 when mortgage rates were higher. This shift in affordability is a direct result of lower mortgage rates and rising incomes. As rents continue to rise, especially in the face of a chronic undersupply of rental properties, many first-time buyers are now seeing purchasing a home as a more financially viable option. This has contributed to the surge in first-time buyers entering the market.
5. What impact will changes to stamp duty land tax have on first-time buyers in 2024?
From April 2025, first-time buyers (FTBs) in England and Northern Ireland will face a reversal of the current stamp duty land tax (SDLT) exemptions. Currently, 80% of FTBs pay no stamp duty, and 14% pay partial tax on properties under £625,000. However, if the thresholds return to previous levels, 20% of FTBs will have to pay stamp duty, which could increase costs significantly. For example, a typical FTB in London could face a stamp duty bill of £5,600, and in areas with homes valued over £600,000, the cost could rise by an additional £15,000. This increase in tax liability is expected to keep future house price rises in check, as FTBs may seek lower-priced homes to offset the added costs.
6. What are the regional variations in house price growth in the UK in 2024?
Regional house price growth in the UK varies significantly. Areas with more affordable homes have seen stronger price growth, including Northern Ireland (+5.6%), the North West (+2.3%), and the North East (+2.0%). On the other hand, regions like the South East (-0.1%) and Eastern England (-0.3%) have seen slight declines. Scotland and Yorkshire & Humberside are also seeing positive growth, with prices increasing by 2.4% and 2.0%, respectively. The overall national average growth is modest, with UK house prices up by 1.0% year-on-year, largely due to regional disparities in market conditions.
7. Why are landlords selling homes, and how does this impact first-time buyers?
Landlords are increasingly selling homes, which has indirectly supported the first-time buyer market. About 12% of homes listed for sale were previously rented, with many of these properties being sold at lower prices than the average market rate. In particular, properties in London that were previously rented tend to have asking prices around £307,000, 16% lower than the overall UK average asking price of £365,000. This trend provides more affordable options for first-time buyers, which is positive for those looking to enter the housing market amidst affordability challenges.