"Whilst spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes."
- Mark Arnold, head of mortgages and savings at Barclays
Growth in rent and mortgage spending increased to its highest rate in 13 months, at 6.4%, in October, according to the latest Barclays Property Insights report.
Despite this increase, consumers displayed their highest level of confidence in the UK housing market this year, as well as in their ability to afford housing payments, with concerns over rising rent and mortgage costs reaching their lowest level since April this year.
More than half of Brits (55%) are confident they can afford their monthly rental or mortgage outgoings, up from 53% in September. Meanwhile, concerns around rising interest rates remained steady at 60%, down from a high of 63% in June 2024, following the Bank of England’s decision to hold the base rate at 5% in September.
When asked about their household expenses, eight in 10 Brits (79%) are concerned about the rise in the energy price cap, with 42% also worried about the impact of rising household bills. However, spending on utilities fell 13.0% year-on-year despite the energy price cap rise on 1st October, as prices are still below where they were in 2023. Still, the price difference isn’t sufficient on its own to account for the double-digit drop in spending, suggesting that consumers are also being more frugal with their energy consumption this year.
Young renters hopeful about homeownership prospects
Over a quarter of renters (26%) reported having confidence in the UK housing market, while a fifth (21%) report that the recent drop in inflation has made them more confident in their ability to afford their housing costs. When asked ahead of the recent government Budget, young renters were hopeful about their prospects, as nearly half of 18-34-year-olds said homeownership is within their reach within the next five years. However, for older renters this drops off, as only three in 10 of 35–54-year-olds (28%) think it will be possible in their lifetime.
Property prices are viewed as the biggest barrier to homeownership by seven in 10 renters (69%), while 60% cite the cost of a deposit. Making matters more difficult, a third (32%) note that their rental payments have increased over the last 12 months, impacting their ability to save for a property of their own.
Brits have moving home on the mind
A fifth (18%) are considering relocating in the next year, with relocating most popular among 18-34-year-olds (33%). UK cities are leading the charge for a desired location (30%) over the countryside (23%) and coast (20%).
Those living rent-free with family, friends or a partner are more likely to want to move to a city or urban area (40%), likely indicative of young people saving money ahead of a move for work.
Renters are the most inclined to make a move to the countryside (28%), whilst owners are more likely to want to move to a city (31%). Of those considering relocation, one in seven (15%) are looking to move away from the UK completely.
For those wanting to relocate, saving money is stated as the primary reason (28%), followed by improving lifestyle or wellbeing (27%) and being closer to friends or family (21%).
Nearly a fifth (18%) of those wanting to relocate said their motivation was to downsize, with this rising to 37% amongst over 55s.
Over a quarter (27%) are considering making improvements in order to improve the sale value of their property, as a fifth (20%) admit concerns that they won’t be able to sell their property for what they believe it’s worth.
However, property updates don’t always have the desired effect for prospective buyers as six in 10 (63%) Brits reported having a housing design feature that turns them off a property.
Mark Arnold, head of mortgages and savings at Barclays, said: “The housing market can be fickle, with housing trends and macro-economic factors having a direct impact on the monthly outgoings of millions of Brits. However, what truly drives the state of play is how confident consumers are feeling. Whether contemplating a relocation, purchasing a first home or redecorating, we can see that Brits have growing faith both in the housing market and in their ability to spend.
“Whilst spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes. Even if interest rates fall as predicted, if this confidence is to be rewarded, more needs to be done to unlock greater capacity in the market to help drive down some of the financial barriers facing renters and homeowners as we look ahead to 2025.”
