"A future scheme is required to boost the levels of consumers entering the property ladder, making homes affordable, flexible and sustainable for the future."
Like the previous year, 2024 brought many challenges to the UK property market. From the UK general election, which resulted in the first Labour-led government in 14 years, to a constantly evolving consumer landscape confronting a higher cost of living, it’s safe to classify this year as a “rollercoaster.”
A volatile market
While the year began with a continuation of the stagnation experienced in 2023, particularly in high-value areas like London, house prices continued to fall in the South East.
Geopolitical events like elections in the UK and the US and the ongoing war in Ukraine have created a complex landscape for buyers, portfolio landlords, and mortgage brokers. The lingering effects of the Truss mini-budget and the high cost of living, combined with other economic factors, further complicated the situation.
Interest rates fluctuated and swap rates rapidly changed, making it difficult for both buyers and sellers to make informed decisions.
The Bank of England’s interest rate cuts in August and then again in November boosted market confidence, but concerns over inflation remain. Many lenders have adopted a more cautious approach and that will likely carry into 2025.
Despite this, it is worth noting that this past October saw over 68,000 mortgage approvals, the highest level since August of 2022.
A strong rental market
The rental sector remained strong in 2024 despite the challenges in the home-buying market. As affordability pressures and higher interest rates made homeownership more difficult, tenant demand surged.
This trend was further amplified by the government's recent budgetary changes, most notably a 2% rise in stamp duty tax for landlords which may have a negative impact on small-scale operators.
As a result, the overall supply of rental properties, especially in the affordable segment, could dwindle over time.
The housing delivery challenge
The new Labour Government's ambitious target of building 1.5 million homes by 2030 is a significant undertaking that requires substantial investment and policy reform.
Although the need for increased housing supply is undeniable, challenges related to land availability and planning regulations could hinder progress. Despite the government's stated intentions, there has been limited evidence of accelerated housing development in recent years.
In fact, the new government is already on track to miss their target by up to 475,000 homes.
First-time buyer support: A mixed picture
This year paints a mixed picture for first-time home buyers, much like in 2023 when there was a 21% decrease in first-time buyers.
While there may be a brief surge in first-time buyers during the final months of this year and early in 2025 due to the change in stamp duty prices, the sobering reality is that for many in the UK, purchasing their first home is a daunting prospect.
Research suggests that 44% of prospective first-time buyers are putting off buying a home because of the affordability and the high cost of buying. While the Help to Buy scheme ended in 2023 and did enable first-time buyers to enter the market, other schemes didn’t deliver on affordability and in some cases left buyers owing on large loans.
It's clear that a future scheme is required to boost the levels of consumers entering the property ladder, making homes affordable, flexible and sustainable for the future.
