Mortgage repayments up 60% since 2021

Home buyers are currently facing an annual increase of £4,300 on their mortgage repayments, rising to £7,500 in London.

How much have mortgages risen since 2021?

Across the whole of the UK, the average buyer is having to find an extra £4,320-a-year to pay their mortgage in 2024, when buying an average priced home with a 30% deposit.

Back in 2021, the average annual mortgage payment was £7,000. Today, it’s £11,400.

And higher mortgage rates are hitting southern England the hardest.

In London, the average buyer will need to find an extra £7,500-a-year to cover the cost of their mortgage, which is now amounting to £23,000-a-year. In 2021, that figure was closer to £15,000.

In the South East, annual repayments on mortgages have risen by £6,000, while in the South West, they’ve gone up by £5,300 a year.

Across the rest of the UK, the picture is less bleak, with buyers in the Midlands needing to find an extra £3,900, while buyers in the North East are paying an extra £2,350.

Our Executive Director of Research, Richard Donnell, says: ‘At a region and country level there has been a 50% to 70% increase in mortgage repayments for a typical buyer between 2021 and 2024.

‘The largest monetary impact is in southern England, where house prices are higher. The annual cost of mortgage repayments for an average priced home is more than £5,000 higher per annum in 2024 than 2021 across the South West, South East, East of England.

‘Two thirds of this increase is a result of higher mortgage rates. However, one third is also down to the fact that average house prices are still 13% higher than they were in March 2021.’

Annual mortgage payments across the UK: 2021 vs 2024

Key takeaways

• The annual mortgage repayments for the average buyer in 2024 have now reached £11,400
• In London, that figure rises to more than £23,000-a-year
• Buyers in the south east are paying £16,600-a-year, while in the east of England, annual repayments average out at £14,530

by Blackstones

The highest yielding areas for buy-to-let property in the UK

Considering becoming a landlord? One strategy for investment is to focus on higher yielding markets. Here are the top investor hotspots in the UK.

Ready to become a landlord and want the biggest return on your investment?

It’s worth getting to grips with rental yield if you’re purchasing a buy-to-let property.

Gross rental yield is the annual rental income expressed as a percentage of the property price. Net rental yield also factors in the cost of maintaining and renting out the rental property. Both can help you decide if a property is a good investment.

The average gross rental yield in the UK is currently 5.60%. This is based on the average buy-to-let property costing £261,897 and the UK’s average rent being £1,223, according to our latest data.

Gross yields have improved across all regions in the last year as house prices have started to fall or remained the same while rents have continued to rise.

Keep in mind that tenant demand and the potential for house price growth - among other factors - should also be considered with property investment.

Top cities for rental yields in the UK

Sunderland, Aberdeen and Burnley top the chart for the highest rental yields in the UK, with average gross yields over 8%.

The top 17 cities for rental yields in the UK are all in the North of England and Scotland. In contrast, southern cities tend to have much higher house prices, bringing the gross yield down for buy-to-let properties.

Here’s how every city in the UK compares for gross rental yield.

Key takeaways

• If you’re looking for a buy-to-let property, rental yield can help you decide if the cost of the property is worth the potential rental income
• Gross rental yields have increased in the last year as rents have risen at a faster rate than house prices
• The highest yielding cities in the UK are Sunderland, Aberdeen and Burnley, which offer average gross yields of 8%+
• The North East is the best region for investors looking for strong yields, offering an average of 7.65%
• We reveal the three highest yielding areas in every region of the UK
• Take other factors into account before you invest, like tenant demand and the potential for future house price growth

by Blackstones

The UK’s cheapest places to rent a home in 2024

Looking for a rental home that doesn’t cost an arm and a leg? Here’s your complete guide to the cheapest places to rent in the UK in 2024.

The UK’s average rent is now £1,223, a rise of +7.8% in the last year.

That’s the lowest level of rent rises for 2 years as the heat finally comes out of the rental market. Demand has dropped a fifth in a year and supply has risen by a fifth in the same period.

However, we still expect rents to rise in 2024, although a little more slowly. This is because rental demand is double the rate of before the pandemic, with 15 enquiries for every home to rent. At the same time, supply of rental homes remains 28% below the pre-pandemic average.

So with rents still rising and the cost-of-living squeeze pushing all our purses to the limit, you might be looking for a cheaper home to rent.

The good news is there are places where it’s much cheaper to rent a home than others. Let’s take a look at the regions, cities and local areas with the cheapest rents in the UK.

The cheapest places to rent in 2024: Regions

For the cheapest rents in the country, set your sights on the North East - you could expect to spend an average of £695 per month on rent here. It’s also the only region with no rental markets averaging more than £1,000 per month.

Northern Ireland, Scotland, Yorkshire and the Humber, and the North West all sit at the cheaper end of the scale too, with rents averaging less than £800 per month at the start of 2024.

As you may expect, rents across the South of England are much more expensive.

London’s average rent of £2,121 per month makes it almost twice as pricey as anywhere else. However, London renters will be glad to hear it has recorded the sharpest slowdown in rent rises, now at +5.1% compared to +15.3% a year ago.

The capital’s high rents are followed by the South East (£1,325), where nearly all private rental homes are now in areas with average rents higher than £1,000 per month. In 2020, that figure was less than 50%.

Then you’ve got the East of England (£1,163), where 70% of homes sit in £1,000-rent markets, and the South West (£1,077), with more than half now over that benchmark.

The cheapest places to rent in 2024: Cities

We’ve got rental data for every city in the UK, and you might be surprised when it comes to the cheapest (and most expensive) places.

The cost of rent varies a huge amount across UK cities, with the lowest in Burnley (£566), Grimsby (£608) and Hull (£612) and the highest in Brighton (£1,616), Oxford (£1,667) and London (£2,047).

Some of the UK’s most popular cities for students and young professionals are cheaper than you might think, too. Liverpool’s average rent comes in at £801 per month, closely followed by Sheffield (£809), Newcastle (£833), Swansea (£867) and Plymouth (£878).

When it comes to Scotland, you’ll find cheap city rents in Glasgow, where rents average £951 per month. Edinburgh is much pricier with an average rent of £1,263 per month.

The cheapest places to rent in 2024: Local authority areas

Let’s go one step further and dive into the local authority areas with the cheapest rent in the UK.

At the top of the table we’ve got Hartlepool, with an average rent of £527 in 2024, along with East Ayrshire (£548), Burnley (£556) and Dumfries and Galloway (£557).

The North East dominates the list, with Country Durham (£575), Redcar and Cleveland (£588), North East Lincolnshire (£608) and Darlington (£611) all featuring.

The North West is also well-represented when it comes to cheap rental spots - including Pendle (£583), Allerdale (£591), Hyndburn (£594), Copeland (£598) and Carlisle (£602).

The rest of the spots are filled by Scottish areas, with North Ayrshire (£602) and Angus (£604) recording some of the lowest average rents in 2024.

by Blackstones

Bank Rate holds at 5.25%, so when will rates drop?

The Bank Rate has remained unchanged for the fourth time in a row since it was raised from 5% to 5.25% in August 2023. Rate cuts aren’t expected until later in the year but mortgage costs have still been falling.

Why has the Bank Rate stayed the same?

The Bank of England monetary policy committee voted by a majority of 6-3 to keep the Bank Rate unchanged this month, with two members voting to increase it by 0.25% and one to cut it by 0.25%.

Although energy prices have fallen, wage growth has eased and the prices of goods and services have been rising more slowly, there’s still a risk that overall inflation will increase again.

The conflict in the Middle East and the attacks on container ships in the Red Sea are two of the factors that could see prices rising faster again.

The committee forecasts that inflation will temporarily fall to its target of 2% in the second quarter of 2024 but that it will increase again over the rest of the year.

It then thinks it will be 2.3% in two years’ time and 1.9% in three. Because of this, there are no rate cuts for now, despite little economic growth.

The Bank of England is giving nothing away about how long it thinks rates should stay the same but experts are predicting that there could be a cut in May or June.

What’s happening to mortgage rates?

While borrowers on variable rates will be disappointed that the cost of their mortgages won’t be going down this month, lenders have been cutting the rates of new mortgage deals over the last six months.

This is good news for first-time buyers but anyone remortgaging is still likely to experience a shock increase in their mortgage repayments.

Mortgage costs – whether you’re taking out a new deal or reverting to your lender’s standard variable rate – remain much higher than they were two or five years ago, when most borrowers would have taken out their current deals.

How have higher mortgage costs affected house prices?

Higher mortgage rates led to fewer property purchases and less mortgage lending in 2023, according to industry body UK Finance. Despite this drop in demand, house prices didn’t follow for the majority of UK homeowners.

According to our latest data, more than half (56%) of homeowners saw the value of their homes stay the same or increase by at least 1% in 2023.

A quarter of homes increased in value by between 1% and 5% while a 10th increased by a sizeable 5% or more.

The average value increase was £7,800. Percentage price rises were larger in more affordable areas of the country, with the biggest increases in the North West and Scotland.

This is dramatically different to 2022, though, when 96% of homes saw their value staying the same or going up and the average increase was £19,700 where it did rise.

What’s the outlook for the mortgage market?

While mortgage costs have been going down, mortgage rates will continue to be relatively high compared to two or more years ago. Rate cuts are on the horizon, though, which will be welcome news for first-time buyers and homeowners alike.

Our Executive Director of Research, Richard Donnell, says: 'The debate about the timing and scale of base rate cuts is important for the mortgage rate outlook.

'The peak in base rates last year led financial markets to bet on lower rates in 2024 and into 2025, which have shaved almost 1% off fixed rate mortgages over the last 2 months.

'There is a sense these cuts to rates are close to bottoming out for now and unlikely to move any lower.

'Inflation is down but not out and central banks want to get it under control before cutting base rates.

'It looks likely mortgage rates will remain in the 4.5% to 5% range, which is still cheap by long run standards.

'Those looking to move or refinance should chat to a broker and seek advice about the rates available and the best strategy for them.'

Key takeaways

• The Bank Rate remained at 5.25% today, despite hopes it would come down
• Inflation has fallen significantly over the past year but it's still above the Bank of England’s target of 2%. It stood at 4% in December 2023, unexpectedly rising slightly from November’s figure of 3.9%
• World events are among the factors that could push inflation up again in the second half of this year
• But experts are predicting that there could be a cut in May or June

by Blackstones

Rental Market Report: March 2024

The average UK rent is now £1,223 after a +7.8% rise in the last year. Rents for new lets will rise more slowly this year, but only a major supply boost will help with rental affordability.

The average rent for new lets in the UK is £1,223 as of January 2024 (published in March 2024).

Rents have risen +7.8% in the last year, the slowest rate of growth in two years.

Key figures

UK rental inflation lowest for 2 years

The heat is finally coming out of UK rent rises. Annual growth is now at the lowest rate for two years, down to +7.8% from +11% a year ago.

This is down to weakening demand and growing affordability pressures on renters, rather than a big boost in rental supply.

No major expansion in rental supply

New investment from private landlords remains low, with the average letting agent currently listing 12 homes for rent. This is a fifth higher than last year but 28% below the pre-pandemic average (16 homes).

Demand cools but still outweighs supply

Demand for rented homes has fallen by a fifth over the last year. One-off pandemic factors have receded, the labour market has cooled and settling mortgage rates have supported first-time buyers.

However, there are more than 15 enquiries for every home to rent. This is double the rate of before the pandemic, despite dropping from over 40 enquiries per property in 2021.

The supply and demand imbalance is narrowing but is far from closed. I expect rents to continue to rise in 2024, just at a slowing rate.

Rental inflation in line with a year ago across most of UK

Across most of the country, rental growth is broadly in line with a year ago despite weaker demand.

Rental inflation is starting to slow across all major cities, with London seeing the biggest slowdown.

Rents continue to rise the fastest in Scotland (+11.6%). In fact, it’s the only UK region or country with double-digit rental growth, although it’s seen a slight slowdown compared to a year ago.

Rental growth slows the most in London

London has recorded a sharp slowdown in annual rental inflation, with rents now rising at a rate of +5.1% compared to +15.3% a year ago.

The balance between supply and demand has narrowed the most in London, with demand -30% lower than a year ago while available supply has increased by the same amount.

This is down to London’s high rents combining with other cost-of-living pressures to hit the pockets of renters, making rising rents ever-less affordable.

Pandemic price growth pushes half of rented homes into £1,000+ per month markets

Rents are 29% higher than pre-pandemic on average

The pandemic years have driven a step-change in rental growth, with the average UK rent jumping 29% since January 2020.

This has pushed many more properties into higher price brackets. Over half of rented homes in the UK (51%) are now in markets with average rents of more than £1,000 per month. This is almost double the number of rental homes in these pricey markets compared to five years ago.

More high-rent areas across Southern England

Rents in southern England have been close to, or above, £1,000 per calendar month for some time. The fast pandemic-fuelled rental growth has pushed many more over this threshold.

Nearly all private rental homes in the South East are now in areas with average rents higher than £1,000 per month compared to less than half in 2020.

In the East of England, it’s 70% today compared to only 24% in 2020. Over half of rented homes in the South West have also breached the £1,000 per month mark.

Rise in £1,000+ rents in affordable regions

A fifth of rented homes in Scotland, the North West, East Midlands and West Midlands are now in areas with average rents above £1,000 per month.

Just 3 years ago, nowhere outside of the South of England had an average rent higher than £1,000.

The North East remains the only region with no £1,000+ rental markets, while 4% of areas in Yorkshire and the Humber are over this price threshold.

Build-to-rent creates new city centre rental markets

There are now more of these £1,000 per month markets in regional markets, as new city centre rental markets emerge at the same time.

The rise of corporate and institutional investment in rented homes has led to the delivery of more than 90,000 new built-to-rent homes across the UK in recent years - with more to come. House builders are also starting to sell new-build homes to corporate landlords.

Rents to remain ‘unaffordable’ in 2024

We measure ‘rental affordability’ by looking at average rent as a percentage of average gross earnings, adjusted to reflect the estimated total income of renting households.

At the end of 2023, this measure of rental affordability reached a high of 29.5%. It came after rents for new lets rose faster than average earnings for more than 2 years (since October 2021).

Rental affordability improved between 2016 and 2021 as rents rose by only 4% in that time. This was a result of weaker demand post-Brexit, growth in rental supply, and easier access to home ownership thanks to low mortgage rates.

In contrast, recent years have been marked by strong demand, no increase in supply and high mortgage rates making it harder for first-time buyers to access home ownership.

This widened the supply and demand imbalance and pushed rents for new lets up faster than earnings. Ultimately, this has led to the deterioration in rental affordability.

The graph shows how rental affordability has tracked since December 2009 to today, with our projection for the rest of this year.

It highlights the difficulties faced by renters in the current climate, even with rents no longer rising as quickly.

Rent predictions for 2024: Rental supply must grow to improve rental affordability

We project that UK rental inflation will halve to +5% in 2024. Meanwhile, the consensus among economic forecasters is that average earnings growth will also slow, to just below +4%.

This means no immediate prospect that rental affordability will improve in 2024.

There must be a sustained expansion in rental supply to see a faster slowdown in rental inflation. It would even result in rents falling in some city centres.

However, any boost in supply this year is unlikely to be at a scale that impacts overall rental growth.

Continually low levels of net-new investment in rental properties means supply will remain below average, supporting further rent rises.

The clear conclusion is that the best way to improve affordability is to boost rental supply. This will continue to come from the new-build sector, but the big needle-mover would be more investment by private landlords.

This looks unlikely - and further rationalisation of landlord portfolios in the face of higher mortgage rates, alongside growing regulation, will offset any rise in new investment in rental supply.

by Blackstones

Sellers make £74k average profit in 2023

9 in 10 homeowners who sold up in 2023 made 25% in profit, with the average seller of a £275,000 property earning £74,000. How much money did your home make?

House prices fell for the first time in 1 1 years during 2023. But that doesn’t mean it’s all doom and gloom for sellers.

We analysed a sample of over 100,000 Land Registry entries from the past 12 months to see how much profit sellers made last year - and the results might surprise.

The average gross gains from a home sale in 2023 was £74,000.

Meanwhile, 93% of sellers made a profit, despite house prices falling.

Sellers’ profits in different areas of the UK

Key takeaways

• The average seller in 2023 put their property on the market after 9 years. In that time, their homes earned them between £30,000 to £137,000, depending on where they lived
• In London, the average seller made £137,000, which works out at just over £15,000 for each year of ownership
• In the North East, the average seller made £30,000, which works out at just over £4,000 for each year of ownership
• Homeowners selling bungalows and detached homes made over £100,000 on average
• However, 1 in 14 sellers (or 7%) sold at a loss of £17,000 on average

by Blackstones

What does the Spring Budget 2024 mean for the housing market?

It was a disappointing Budget for anyone hoping for measures to help home buyers and mortgage borrowers but tax changes announced could have a small impact.

Today’s Spring Budget was a chance for the Government to boost its popularity ahead of this year’s general election but there will be many younger and less wealthy voters left disappointed by the lack of measures to address the shortage of affordable housing in the UK and the challenges of getting a mortgage.

It was thought that a new 99% mortgage scheme could be announced but this idea has now been ditched.

It would have helped aspiring first-time buyers with small deposits get onto the property ladder, although critics pointed out that it would also expose them to greater risk of getting into negative equity if house prices were to fall.

There were also hopes that the early withdrawal penalty on Lifetime ISAs, which help people save for their first home or retirement, would be reduced and the limit on the value of home you can buy using the money you save in them would be increased.

However, there were some tax tweaks that could result in a modest boost to the housing market.

Capital gains tax cut   

Currently, if you sell a residential property that isn’t your main home and you’re a higher rate tax payer, you pay 28% tax on the profits you make.

From April this will be cut to 24%, which could encourage more people to sell property and increase the supply of homes available.

On the other hand, wealthy property owners will get to keep more of the money they make when they sell it.

Holiday lettings tax breaks abolished

Owners of furnished holiday lets currently get more tax breaks than owners of buy-to-let properties but these will be scrapped from April, making holiday letting a less attractive option.

This could result in more longer-term rental property becoming available or more homes available to buy for local people.

Our Executive Director of Research, Richard Donnell, says: 'The furnished holiday let changes will see a mix of impacts split between more homes returning into the long let market or some of these homes being sold, benefitting from a reduction in capital gains tax.

'The impact will be felt in tourist hotspots, where most of these homes are to be found. But it's unlikely to have a big impact on the wider market in these areas. It is a further attempt to ensure investors can't outbid first time buyers.'

Stamp duty relief on multiple dwellings scrapped

There was one change to stamp duty announced, however.

From June, anyone buying more than one residential property at once will no longer pay less stamp duty than if they were buying them individually.

The Government says this is because there was no evidence that this relief was encouraging more people to invest in the private rented sector.

Our expert's view

'The Budget marks another missed opportunity to take action on boosting supply and mortgage availability in the housing market,' says Donnell.

'The consensus is that the country needs more new homes. Supply has increased but this has now stalled.

'There is a need for a widespread reform of the planning system to encourage more supply. More funding is needed for social and affordable homes, as well as investment in housing infrastructure to unlock more homes.

'The Government should also look to support the emergence of a long-term fixed rate mortgage market as a matter of urgency.

'This will help more young people with smaller deposits access home ownership – particularly in southern England, where deposit size is the biggest barrier to getting on the housing ladder.

'Another missed opportunity is the decision not to make the £625,000 threshold for first-time buyer relief permanent. This means 30% more first-time buyers will be liable to pay full stamp duty from March next year.'

Key takeaways

• The Chancellor has announced a cut in the rate of capital gains tax paid on property sales
• Tax breaks for those letting holiday homes are to be scrapped
• There are no plans to make the temporary higher stamp duty threshold permanent

by Blackstones

Should I buy my first home in 2024?

How are first-time buyers coping with higher mortgage rates? We take a look out how buyers are stepping onto the property ladder as borrowing gets more expensive.

First-time buyers wait in the wings and save larger deposits

Despite higher borrowing costs,  first-time buyers (FTBs) haven't changed what they’re looking for in a home.

Three-bed houses, below the average price for their local area, remain the most popular choice.

And most buyers are looking within a five-mile radius from where they’re already based.

First-time buyers were expected to adjust what they want from their first home in the face of higher mortgage costs, but many remain resolute in the criteria they want and need from their first home.

Those who have bought have managed to secure their first homes by putting more equity into their deposits and taking advantage of it being a buyers’ market where possible.

That said, many have parked the idea of buying until their financial situation improves or mortgage rates fall.

UK Finance data show that almost 80,000 (-20%) fewer first-time buyers bought their first home in 2023 compared to 2022.

First-time buyer deposits increase alongside mortgage payments

The average price of what first-time buyers are looking to buy on Zoopla increased by 1.2% over the course of 2023.

Most are now looking at properties costing an average of £244,100, that’s £2,800 higher than a year ago.

However, this small increase in first-time buyer prices does not necessarily mean paying larger mortgages.

UK Finance data shows that the average loan-to-value has declined slightly to just under 76%, meaning FTBs are using slightly larger deposits.

Based on the average price of a first-time buyer home on Zoopla, we estimate the average deposit size paid has increased by £3,300 (5.9%) over 2023.

This means that the typical first-time buyer mortgage is almost the same compared to a year ago (+£500).

Using slightly larger deposits did not, however, fully offset higher borrowing costs.

Higher mortgage rates mean that first-time buyers now need to pay mortgage bills that are 27% higher than they would be if they’d purchased their first home in the second half of 2022.

We estimate the monthly mortgage payment for a first-time buyer purchasing an average-priced home of £244,100  is now £990. That’s over £200 more than a year ago.

First-time buyers look for homes priced below market average

First-time buyers are looking for family homes at value-for-money prices.

Nationally, the average first-time buyer price is 8% below that of the UK average sold price. This translates to a saving of £20,300 on average.

First-time buyers in London, the South West and Yorkshire and the Humber are looking for the largest savings of 23% or more.

In the capital, first-time buyers typically look for homes that are £137,800 below the average price of £536,800, going up to £184,00 in West London (W).

This level of discounting is possible if first-time buyers choose apartments, which now attract nearly 70% of first-time buyer enquiries in London.

The South West is where first-time buyers are looking for some of the largest percentage discounts off the average local house price.

This is most evident in the areas that saw the largest value boosts during the pandemic. The typical discount being sought by a first-time buyer in Truro (TR), Cornwall and Dorchester (DO) in Dorset is 39%, the UK's largest discount for first-time buyers.

On the other hand, buyers in the East of England and Scotland are looking for homes that are closest to the regional average, with up to a 6% gap between market price and what first-time buyers are willing to pay.

In areas such as Glasgow, Motherwell and Paisley, first-time buyers are even looking for homes priced slightly above the average market price.

First-time buyers aren’t changing what they want from a home

Looking for a smaller home, to upsize further down the line, is one of the tactics that first-time buyers can use to get on the ladder in this higher mortgage rates environment.

Today’s first-time home buyer prefers 3-bed houses, attracting close to half of FTB enquiries in 2023. This shows us that first-time buyers are taking a long-term view.

Terraced homes are one of the most affordable options for those looking to buy a family-sized home. And this is what first-time buyers are turning to in both expensive and cheaper markets.

In 2023, terraced homes were the most sought-after property type among those looking to buy for the first time in southern England.

This mirrors historical trends, despite the serious hit to the buying power that was amplified by higher prices in this part of the UK.

However, in 2023, first-time buyers in southern regions were looking to spend £3,400 less (-1.2%) on average on a terraced house compared to late 2022.

This tells us that first-time buyers may not be changing their preferences, but are definitely trying to make the most of cooling market conditions.

Terraced homes are also the most popular choice among first-time buyers in the North East, North West, Wales and Yorkshire and the Humber, where 4 in 10 first-time buyer enquiries relate to this property type.

The average price of terraced homes attracting first-time buyer interest in these areas has also cooled down. Yorkshire and the Humber is an exception, where prices increased 4.3% in 2023.

In the Midlands, classic 3-bed semi-detached homes are the most popular choice for first-time buyers. Here, the price of semis that first-time buyers are interested in remain in line with the later part of 2022.

In contrast, FTBs in London and Scotland prefer flats, which are both very common and historically popular amongst those looking to step on the property ladder in these areas.

Little appetite to relocate to boost buying chances

In the face of higher borrowing costs, first-time buyers have an option to move further afield to access more affordable markets.

But in reality today, fewer buyers are deciding to make a big move, compared to previous years.

Only 27% of first-time buyers are looking for their first home 10 miles or more from where they’re currently living, down from 29% a year ago.

This decrease goes hand-in-hand with an increase in the stock of homes for sale: more homes on the market means FTBs don’t have to look so far to find the home they want and need.

Over half (55%) of first-time buyers enquire about homes within a 5-mile radius from where they are based, which is a bigger proportion than other buyer groups (48%).

Having said that, FTBs in the less affordable markets of southern England are more likely to look for a home more than 10 miles away.

41% of enquiries in the East of England, 34% in the South East and 31% in London fall into this category. In northern England and Midlands, only half this number of first-time buyers look beyond 10 miles.

This highlights how affordability challenges in the South are a bigger trigger for first-time buyers to look further afield than in the North.

Why aren’t first-time buyers changing their requirements?

The average age of a first-time buyer in the UK today is currently 33, which means many will be buying with family needs in mind.

Nearly twice as many first-time buyers now have dependent children, compared to during the pre-2007 financial crisis period.

This, as well as more modest equity and wage growth than a few decades ago, is encouraging first-time buyers to look for more long-term homes, rather than traditional starter homes or flats.

This means that 3-bed houses attract nearly half (48%) of first-time buyer enquiries outside London in 2023. This is down from a 52% peak in 2021, but signals that first-time buyer needs remain the same as during pandemic.

What can first-time buyers expect in 2024? 

We have seen some positive signals from mortgage markets last month, with lenders offering more deals to attract first-time buyers. This will lead to a small increase in buying power, which was a problem for many first-time buyers in 2023.

Meanwhile, earnings growth, alongside falls in house prices, is improving affordability. This, combined with lower borrowing costs, should encourage more first-time buyers to come to market in 2024, particularly in the second half of the year

Key takeaways

• Most first-time buyers are now looking at properties costing an average of £244,100, that’s £2,800 higher than a year ago
• However across the UK, the average first-time buyer price is 8% below that of the UK average sold price, a saving of £20,300
• The monthly mortgage payment for a first-time buyer purchasing an average-priced home of £244,100 is now £990. That’s over £200 more than a year ago
• 3-bed houses remain the top property choice on Zoopla for first-time buyers
• Recent falls in mortgage rates will support first-time buyers looking to buy in 2024

by Blackstones

More homes come to market as house prices hold steady

Buyers have a lot more choice when it comes to securing a home in 2024. More sellers are coming to market as mortgage rates are expected to plateau at 4% to 5%.

The number of homes available for sale is up 20% on this time last year, meaning much more choice for home hunters.

Meanwhile, house price reductions are lower than a year ago but remain above average, as house price falls continue to slow.

Annual house price inflation is currently at -0.5% year-on-year, up from the recent low of -1.4% recorded in October 2023.

Where can buyers find the biggest price reductions right now?

The biggest cuts to house prices (5% or more) are currently underway in the UK’s more expensive regions: the South East and East of England.

Five English regions are registering annual price falls of up to -2.1%, led by the East.

However, house prices have moved into positive territory in the remaining 4 regions of England, alongside Wales, Scotland and Northern Ireland - where prices have risen 4.3% in the last year.

Will mortgage rates come down in 2024?

Mortgage rates have fallen back to where they were a year ago, but they remain above 4% and are likely to plateau at this point for the foreseeable.

Our Executive Director of Research, Richard Donnell, says: ‘Mortgage rates could move a little lower over the year, but this hinges on the timing of future base rate cuts, which may come later in the year.’

Falling mortgage rates are important when it comes to boosting housing market activity, but lenders have recently been pulling mortgage deals below 4%.

‘The cost of finance used to fund mortgages has increased modestly in recent weeks,’ says Donnell. ‘Rising incomes are helping to offset the impact of higher borrowing costs, but at a slow pace.

‘Buyers should anticipate 4-5% mortgage rates over much of 2024.’

A three-speed housing market

Across the UK over the last 18 months, there has been a rapid slowdown of house price inflation, largely due to higher mortgage rates and cost of living pressures.

These factors have mainly hit prices in the more expensive areas of the UK, such as London and the South, while areas with more affordable housing, such as the North, have been less impacted.

The housing market has now become divided into three groups:

1) Southern England is registering the largest price falls

The East, South East and South West regions have been hit hardest by rising mortgage rates and reduced household buying power. Largely because the average home price here is £344,000, which is 30% above the UK average.

2) London is seeing the lowest price inflation

‘While it is the most expensive housing market with an average price of £534,000, London is a market that has registered much lower levels of house price inflation over the last seven years,’ says Donnell.

‘Affordability has been improving slowly over this time, opening the market up to more potential buyers than before.’

London is now in hot demand as a location, yet fewer sellers are coming to market in the capital (+7% year on year), compared to the rest of the UK (+21% year on year).

This means demand is outstripping supply, so house prices are holding steady in the capital, rather than falling as they are in the rest of Southern England.

3) The rest of the UK is seeing firmer pricing

‘Over the last 12 months, annual price falls have been very limited across the rest of the UK, where house prices are at or below the UK average,’ says Donnell, ‘because the impact on buying power from higher mortgage rates has been less pronounced.’

In fact, Scottish house prices have been rising in the last 12 months, while Northern England, the West Midlands and Wales are registering firmer pricing because they are more affordable. Consequently more sales are being agreed here.

Will the Budget have anything in store for buyers?

‘We don’t expect the Budget to have any specific measures that will boost market activity in the very short term,’ says Donnell.

‘There is a case to make permanent stamp duty changes for first-time buyers from the 2022 autumn budget.

‘But any longer-term measures such as the Mortgage Guarantee Scheme or small deposit mortgages will take longer to impact market activity, with much depending on the scale of the proposals.’

Key takeaways

• 20% more homes available for sale as sellers return to market
• House prices not expected to rise quickly in 2024
• 15% more sales are being agreed, boosted by falling mortgage rates, which are now plateauing
• There is a 3-tier housing market split between southern England, London and the rest of the UK

by Blackstones

Sales agreed up 15% as buyers return to market

Buyers are back in market and demand is now 11% up on this time last year. This is good news for sellers, as the number of sales agreed climbs 15%.

Sales market activity continues to improve

Pent up demand is returning to the housing market as mortgage rates return to 4-5%, which is good news for sellers.

More buyers are looking to secure homes, with demand up 11% compared to this time last year.

But even more importantly, the number of sales agreed is also up 15% compared to early 2023.

This shows both greater buyer confidence and more realism on pricing by sellers.

North East and London lead the way in sales

In the North East, the number of homes going under offer is up +17% on this time last year, while in London 16% more homes have sales agreed.

Across the UK as a whole, more properties are now coming to market, with 21% more sellers putting up their For Sale signs than this time last year.

This, in turn, is increasing the choice of homes available for buyers and supporting sales for sellers.

Our Executive Director of Research, Richard Donnell, says: ‘The housing market has proved very resilient to higher mortgage rates and cost of living pressures.

‘More sales and more sellers shows growing confidence among households and evidence that 4-5% mortgage rates are not a barrier to improving market conditions.’

Are sellers still reducing their prices?

‘While increased activity levels are welcome news, it’s important to note that a small proportion of sellers continue to reduce asking prices to attract buyer interest,’ says Donnell.

However, sellers will be pleased to learn that fewer price reductions are now taking place, compared with this time last year.

Reductions are still above average right now, as higher mortgage rates continue to make buyers price sensitive, but discounts of 5% or more are mainly taking place in the South East and East of England.

What will happen to house prices in 2024?

‘There is clear demand from homeowners and first-time buyers looking to move and buy their first home in 2024,’ says Donnell.

‘This is going to support higher sales volumes, but we don’t expect higher house price growth.

‘The reality is that the housing market is still adjusting to higher mortgage rates and the impact of reduced buying power, which has varied across the country.’

This means that sellers will need to remain realistic on pricing, but the fact that their home is likely to attract more interest is good news, as it increases the chances of agreeing a sale.

‘The average estate agent is agreeing 6 new sales a month, up from 5.2 a year ago, which proves that house prices don’t need to fall to support sales,’ says Donnell.

This is feeding through into our UK house price index, which continues to record a slowdown in the rate of price falls.

Annual house price inflation is currently -0.5%, up from the recent low of -1.4% recorded in October 2023. And house prices are now 1.5% below their peak of £268,000 in October 2022.

What’s going to happen to mortgage rates in 2024?

Mortgage rates have fallen back to where they were a year ago, but they remain above 4% and are likely to plateau at this point for the foreseeable.

‘Mortgage rates could move a little lower over the year, but this hinges on the timing of future base rate cuts, which may come later in the year,’ says Donnell.

Falling mortgage rates are important when it comes to boosting housing market activity, but lenders have recently been pulling mortgage deals below 4%.

‘The cost of finance used to fund mortgages has increased modestly in recent weeks,’ says Donnell. ‘Rising incomes are helping to offset the impact of higher borrowing cost, but at a slow pace.

‘Buyers should anticipate 4-5% mortgage rates over much of 2024. But our consistently held view is that 5% mortgage rates are the tipping point for annual house price falls.

‘Mortgage rates over 6% for a sustained period would lead to larger double-digit price falls. Mortgage rates in the 4-5% range are consistent with flat to low single digit price rises.’

Will the Budget have anything in store for sellers?

‘We don’t expect the Budget to have any specific measures that will boost market activity in the very short term,’ says Donnell.

‘There is a case to make permanent stamp duty changes for first-time buyers from the 2022 autumn budget.

‘But any longer-term measures such as the Mortgage Guarantee Scheme or small deposit mortgages will take longer to impact market activity, with much depending on the scale of the proposals.’

Key takeaways

• Demand rises 11% and sales agreed are 15% higher than a year ago
• Sellers make a return with 20% more homes for sale than this time last year
• Activity is being boosted by falling mortgage rates, which are now plateauing
• We expect to see more sales in 2024, rather than faster price growth

by Blackstones