Wrapping up the 2024 Housing Market

As the year staggers towards the finish line, a tumultuous housing market reaches its climax.

Mortgage rates have caused a consistent talking point throughout the industry, along with rising insurance premiums across several landscapes, including home insurance.

The rental landscape has remained in a state of high demand with low supply, with recent years showing UK residents opting to rent over climbing the property ladder in a heightened economy. Real estate agents, Savills ^[1] predict a 17.6% increase in rents over the next five years.

The end of the year is the perfect time to look at the latest news, offering an opportunity to learn from patterns and trends as we creep ever closer to 2025.

Rising Interest Rates and Mortgage Affordability

Rising interest rates have caused the cost of borrowing to increase throughout most of the year. However, in September, the Bank of England cut borrowing costs from 5.25% to 5%, spelling a potential for lower lending rates moving forward.

As reported by BBC News ^[2], BoE could become more ‘aggressive’ with cutting rates further following the first rate drop in four years.

With the majority of property owners tied to fixed-rate mortgages, the results may not be imminent. However, those with mortgage deals tracking these changes may be impacted due to further developments.

Rising wages, partly due to inflation and the heightened cost of living, have played a significant role in the recent boom of house sales unseen since pre-Covid levels. Post-Covid house sales were significantly driven by government incentives such as the elimination of stamp duty and help-to-buy schemes.

Interest rates remain at a historically low level, which have contributed to the recent increase in house sale figures. Fierce competition amongst lenders has caused mortgage rates to reduce, creating more opportunities for those looking to purchase property.

House prices are rising slightly, with a 1% rise since September 2023 (-0.9%). This slight increase shows the hunger for property may yet be growing amongst first-time buyers.

However, it’s important to note that regional prices will be varied, with some areas seeing increases, whereas other locations may see decreases.

Resilience in the Rental Market

According to the Office for National Statistics (ONS) ^[3], as of December 2023, 19% of UK households were renting.

Using the Office for National Statistics’ Families and households in the UK: 2023 ^[4] publication, there are upwards of 28.4m households in the UK, meaning a figure of approximately 5.4m renters.

The 2021 census indicates that there were 5.6m renters in the UK, equalling roughly to a 3.5% drop in the lead-up to 2025. As per Zoopla ^[5], tax and policy changes will push some landlords to exit the market, straining the supply and keeping the pressure on rents, next year.

Demand will remain strong, with home unaffordability playing a significant role. Accompanied by rent rates climbing ever higher, low-income renters are likely to feel the financial squeeze throughout the year, as options become more limited.

Looking Ahead to a Strong Start for Housing in 2025

As per GetAgent.co.uk  via The Intermediary ^[6], previous records portray a consistent chain of events at the start of each calendar year.

Mortgage approval data from the Bank of England shows a trend from January 2021 to September 2024. On average, there were 67,564 monthly mortgage approvals in Q1 over the last four years, compared to 66,503 approvals in Q2.

55.4% of all homes on the property market found a buyer in Q1 throughout these four years, showing a strong start to the year, before climbing to 58.2% in the Q2 months.

These figures show a demand for mortgage brokers over the coming months, and a need for guidance throughout these processes.

Enter 2025 with Source

As we turn the page on 2024, starting a new chapter, we step into a fresh year with the same reliable support from Source Insurance.

At Source, we’re raring to help advisers and your clients as we continue to face a turbulent market. From mortgage rates to house prices in flux, we can provide you with modern tools to best offer the full GI experience.

Utilise The Source for a fully advised or semi-assisted journey, offering unrivalled flexibility. Fit the process around the busy life schedules that affect you and your clients. Subdue self-service objections and offer your clients more control to complete their quote in their own time.

Prefer to refer? No problem! Explore Source Go and offer your clients a quote using only basic information. Seamlessly integrate General Insurance into the mortgage process by offering a speedy quote at purchase, increasing your client’s coverage, your reputation, and your income as a result. There’s no regulatory responsibility involved!

References

^[1] Cook, L. (2024) Mainstream Residential Forecasts 2025-29 – Savills. Available at: https://www.savills.co.uk/research_articles/229130/368928-0 (Accessed: 20 November 2024).

^[2]  Jordan, D. (2024) Interest rates: Bank of England could be ‘more aggressive’ on cuts, BBC News. Available at: https://www.bbc.co.uk/news/articles/cx2lp5l9dpro (Accessed: 05 November 2024).

^[3] Number of renters in the UK (2024) – Office for National Statistics. Available at: https://www.ons.gov.uk/aboutus/transparencyandgovernance/freedomofinformationfoi/numberofrentersintheuk#:~:text=We%20do%20not%20have%20data,across%20the%20UK%20in%202023. (Accessed: 05 November 2024).

^[4]team, D. (2024) Families and households in the UK: 2023, Families and households in the UK – Office for National Statistics. Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2023 (Accessed: 05 November 2024).

^[5] Donnell, R. (2024) Rental Market Report: September 2024 – Zoopla. Available at: https://www.zoopla.co.uk/discover/property-news/rental-market-report/ (Accessed 20 November 2024).

^[6]O’Connor, J. (2024) Property market poised to pick up pace after Christmas lull, analysis finds, The Intermediary – Latest UK mortgage news. Available at: https://theintermediary.co.uk/2024/11/property-market-poised-to-pick-up-pace-after-christmas-lull-analysis-finds/?utm_medium=email&utm_source=rasa_io&utm_campaign=newsletter (Accessed: 05 November 2024).