UK Housing Market and Home Buyers Evolving for Changing Economy

UK Housing Market and Home Buyers Evolving for Changing Economy

First time buyers are not having an easy time of it in the UK housing market. House prices are elevated, and borrowing is expensive. Saving for a deposit, according to a recent report, could take fifteen years or more for the average first time buyer. Along with saving for a deposit, hopeful home buyers are dealing with inflation. However, buyers are finding ways onto the property ladder, and some are doing so in creative ways.

Not buying could be more costly as demands for housing and other factors have pushed rental costs upward. Not only is being a homeowner a dream for most, but it could also be a way to save money and offer peace of mind with the security ownership brings.

According to the recent data released by Halifax, first time home buyers with mortgages taken out between December 2023 and January were in joint names of two or more people. Buyers could be couples buying the home in both names, it might be parents added to the mortgage alongside their purchasing children, or friends or family assisting in the purchase. 

The average deposit for first time buyers was £53,414 last year, with the average house price at £288,136. Yet, in 2022 when the average house price was higher at £302,008, it was easier to become a homeowner due to the lower cost of borrowing.

In February 2022, the Bank of England’s standard base interest rate was 0.50% and it is now 5.25%. The difference in repayments could be substantial and that difference could define whether the home purchase is affordable.

While some first-time home buyers have aligned assistance in their purchase, others are turning to DIY repairs and upgrades to get into homeownership. By shopping for a home among overlooked, less modern properties, a lower purchase price could make all the difference.

The average home buyer age in the UK is now 32 years old. Buyers are older than decades prior, which reveals the difficulty in becoming a homeowner. Obviously, the hard parts are high home prices, inflation taking money out of household budgets, difficulty in saving, higher borrowing costs, and the lack of properties available for first time buyers. 

Changes are on the horizon which could help buyers. Interest rates have been lower for mortgage borrowers due to a competitive environment developing in lending. Some mortgage offers have dropped below the standard base rate, despite the Monetary Policy Committee (MPC) holding the base rate steady since September. House prices, while still up, are lowering slowly, partially due to more properties being added to the housing market. Inflation is moving toward the target rate and while at the start of last year it was in double digits, it is now at 4.0%. In addition, hopeful home buyers are being resourceful in gaining assistance in house buying and creating their own opportunities to own their dream home even if that means they must upgrade it themselves bit by bit into the future.

Due to the difficult and unique strategies required to become a homeowner in this current economy, experts encourage consideration be made for their first remortgage. Perhaps it is two years away, but time will pass quickly and knowing the benefits of remortgaging is helpful no matter where a homeowner is in their current term. The knowledge will allow a homeowner to react to the different economic conditions to keep their homeownership secure. 

The UK housing market is proving to be resilient, but it is evolving to perhaps not be as active a market as the past few years, but one that brings home buyers in prepared to meet the unique economic changes in the near and distant future.

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