The market is primed for a resurgence
This year could be a high-performing year for the UK housing market, witnessing its strongest surge in new sales since late 2020 as mortgage rates stabilise at their lowest in two years and household incomes rise.
The latest Zoopla House Price Index has revealed this trend, creating a promising environment for mortgage brokers, particularly those focusing on first-time buyers (FTBs) and existing homeowners ready to re-enter the market.
Zoopla has reported that property prices are only inching up at an annual rate of 1%, compared to a decline of 0.9% this time last year, though regional disparities are notable.
More affordable areas like the North East, Yorkshire, Humberside, and Northern Ireland are experiencing above-average price growth, with the latter seeing a substantial 5.6% rise. Meanwhile, markets in Eastern England and the South-East have seen slight price declines of 0.3% and 0.1%, respectively.
According to Zoopla’s analysis, UK-wide prices are expected to end the year around 2% higher, boosted by a healthy supply of homes and the gradual rebound in buyer confidence.
The sales pipeline is now valued at £113 billion, marking a 30% increase from last year when higher mortgage rates dampened buyer demand. Zoopla reports 306,000 properties in the pipeline, a 26% rise compared to the same period in 2023. This increased activity has bolstered transaction volumes, which are projected to reach 1.1 million by the end of the year. Many of these transactions are expected to complete in early 2025, providing a positive outlook for brokers focused on maintaining a steady flow of deals into the new year.
Meanwhile, first-time buyers have emerged as the largest buyer group in 2024, accounting for 36% of all transactions, followed by existing homeowners (31%) and cash buyers (27%). This surge in first-time buyer activity is attributed to the narrowing cost gap between renting and owning. Zoopla notes that the average mortgage repayment on a typical first-time buyer property is now 17% cheaper than renting — compared to just a 2% difference a year ago.
The upcoming October Budget could see an end to the current stamp duty relief for first-time buyers, which exempts them from tax on properties up to £425,000 and offers partial relief on homes up to £625,000. If the relief ends in April 2025, as planned, an estimated 20% of FTBs would become liable for full stamp duty, and 14% would pay a partial rate.
In high-cost areas like London and the South East, this change could result in significant additional costs for first-time buyers, further dampening demand in those regions. For brokers, understanding the implications of these potential policy shifts is crucial for advising first-time buyer clients who may be affected by increased upfront costs.
“It is positive to see the sustained increase in sales activity over 2024 which reflects growing confidence among buyers and sellers supported by lower borrowing costs and rising incomes,” said Richard Donnell (pictured), executive director at Zoopla.
“First-time buyer numbers have recovered as mortgage rates have fallen but a sizeable deposit is still required to buy. Possible changes to stamp duty relief will only create further barriers to ownership for this group who already face significant affordability constraints.
“The housing market doesn’t need short-term policy tweaks from the Budget. The health of the housing market and people’s ability to afford housing is linked to the health of the economy. It’s vital the Budget is focused on economic growth and expansion in jobs and rising incomes. The primary focus should be on providing the financial support and investment needed to help build the homes the nation needs for buyers and renters.”
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