House Prices
As of November 2024, the average house price in the UK reached £289,707, marking a 3.3% increase from the previous year. This growth was uneven across regions, with Northern Ireland, the North East, and the North West experiencing the fastest rises. Conversely, London saw a slight decline of 0.1% in house prices during the same period.
In London, house sales have surged to their highest levels since the 2016 Brexit vote. This uptick is largely driven by first-time buyers aiming to finalize purchases before the stamp duty changes scheduled for 31 March 2025. Foxtons, a prominent London estate agency, reported a 30% increase in sales revenues for 2024, with the number of homes under offer reaching pre-Brexit levels.
Rental Market
The rental sector is also undergoing significant changes. For the first time since 2019, advertised rents outside London have decreased on a quarterly basis. The average rent for new private-sector tenancies outside the capital fell by 0.2% to £1,341 per month in the last quarter of 2024. This decline is attributed to a 13% increase in available rental properties and a 16% drop in prospective tenants compared to the previous year. Despite this, rental applications remain high, averaging 10 per property.
In contrast, London continues to see rent increases, with average rents reaching £2,695 per month, a 2.4% rise from the previous year. The rental market’s cooling trend outside London is a notable shift after years of intense competition and rising costs.
Affordability
Earnings growth in 2024 has slightly improved housing affordability for first-time buyers. The proportion of monthly income needed for mortgage repayments decreased to 36%, down from the previous year but still above the long-term average of 30%. House prices rose by 3.4% to £292,000 in 2024 and are expected to increase further, although earnings are also predicted to rise. The government is considering loosening lending rules to aid first-time buyers, though experts suggest increasing housing supply could better address affordability issues.
In summary, the UK housing market is experiencing a period of transition, with regional disparities in house price growth, a cooling rental market outside London, and marginal improvements in affordability for first-time buyers. These trends highlight the complex dynamics at play as the market adapts to evolving economic conditions.
