How is the housing market faring?

Recent reductions to Bank Rate may have prompted some cautious optimism among consumers, a report* suggests.

In December 2024, rent and mortgage spending increased annually by 1.8% – a significant improvement on the previous month, when spending grew by 8.2% annually. Despite this slowdown, only 52% of consumers were confident in their ability to afford mortgage and rental payments in December – the lowest level recorded in 2024. Concerns about rising interest rates persist, with 62% expressing apprehension in December, slightly below the peak of 63% in June 2024.

Will market activity pick up?

There is some indication that activity will pick up in 2025 and beyond. Head of Mortgages and Savings at Barclays, Mark Arnold commented that “cautious optimism is emerging”, partly due to “the recent softening of house prices and imminent Stamp Duty changes, which have motivated both potential buyers and sellers to act swiftly”. Promisingly, one in six homeowners are planning to move this year. Also, 22% of renters believe that they could own a home within the next five years. Prospective buyers are prioritising garages or driveways (40%), gardens (39%) and functional spaces such as pantries or utility rooms (32%) in their house hunt.

Obstacles faced by FTBs

When asked to identify the main obstacles to homeownership, 40% of renters cited property prices while 37% said affording a deposit. Nearly six in 10 renters (57%) believe that it is not possible to own a home without receiving an inheritance or access to the Bank of Mum and Dad. However, only 18% of recent first-time buyers said they received financial support from a family member.

Overcoming affordability challenges

Many renters are proactively saving for home purchases without external support, with 35% building their deposit themselves. Some have opted to share the cost, as 17% are saving up to buy with a partner or friend. To maximise their savings, 41% are trying to reduce their monthly bills, which aligns with a 6.7% drop in utilities spending in December, despite rising energy costs. Also, 29% of new homeowners have made use of first-time buyer schemes to help them get on the property ladder. A quarter opted for longer mortgage terms to reduce monthly mortgage repayments.

Motivations for moving

Over the past three years, 30% of Brits, encompassing both renters and homeowners, have moved residences. The primary motivations include lifestyle enhancements (17%), proximity to family and friends (17%), and the need for larger living spaces (15%).

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Your home may be repossessed if you do not keep up repayments on your mortgage

*Barclays, 2025