But confidence in the UK housing market still rises
Spending on rent and mortgages rose by 7.7% in February compared to the previous year, as more homeowners transitioned from lower fixed rate mortgages to higher rates, according to the latest Barclays Property Insights.
The increase in costs, along with upcoming changes to Stamp Duty Land Tax (SDLT), is creating uncertainty for buyers, though renters remain focused on accelerating their homeownership plans.
Confidence in the UK housing market rose to 30% in February, up from 24% in January, reaching its highest level since October 2024. However, concerns about inflation (88%) and interest rates (64%) remain at their highest levels since September 2023.
Homebuyers in England and Northern Ireland who fail to meet the approaching SDLT deadline could face an average of £6,512 in additional costs. This has led to a rise in mortgage activity, with Barclays reporting a 26% increase in average monthly mortgage completions since the announcement of the tax changes in the Autumn Budget.
First-time buyers have been particularly active, with their share of completions rising from 29% to 36%, driven by a 59% increase in purchases. However, the SDLT changes are also impacting property choices. Demand for homes priced above the current £425,000 tax threshold has declined, with completions in this bracket falling from 21% in October 2024 to 16% in February 2025.
Some buyers are adjusting their plans in response to higher costs. Barclays’ research found that 12% of those currently in the buying process would withdraw from their purchase if they fail to complete before the end of March. Additionally, 21% of prospective movers are considering smaller properties, while 18% are looking at more affordable locations.
Rent increases keep homeownership out of reach for many
Despite reports that rental price growth is slowing, renters continue to face financial pressure. Nearly 58% of renters saw an increase in rent over the past year, with 29% experiencing a rise in the last six months. The impact has been most significant for Gen Z renters (ages 18 to 27), with 36% reporting a rent hike in the past six months.
The average UK renter is paying £105.90 more per month due to rising rents, while Gen Z renters face an average monthly increase of £134.70, or £1,616 annually. One in five renters (20%) cited rising rental costs as a major barrier to homeownership.
Even with these challenges, many younger renters remain determined to buy. Nearly 57% of Gen Z renters are currently saving for a deposit, and 40% believe they can purchase a home within five years - higher than the 23% average across all age groups. However, financial support from family is becoming increasingly crucial, with 64% of Gen Z renters stating they would not be able to buy without an inheritance or loan.
Barclays data also showed that the average age of a first-time buyer in the UK rose to nearly 34 in 2024, up from 32 just two years earlier.
“Our latest data indicates that prospective buyers are adapting their behaviour to get ahead of some of the volatility in the market,” said Sian McIntyre (pictured left), managing director of mortgages and savings at Barclays.
“Encouragingly, amid rising house prices, uncertainty around interest rates, and the upcoming changes to stamp duty, consumer confidence in the housing market is staying the course. Renters are still determined to overcome barriers to homeownership, with this resilience testament to the value individuals place on investing in property.”
Will Hobbs (pictured right), managing director at Barclays Private Bank and Wealth Management, added that the housing market continues to unevenly find its feet after the turbulence of the pandemic.
“Much of the step change in interest rates of the past few years has now been digested by households and the geography of demand has settled a little further,” Hobbs said. “Even though the cyclical picture for the UK remains a little sluggish on the evidence of incoming data, we continue to see the outlook as better set than feared.”
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