The UK housing market returned to growth in 2024 driven by a £22.3bn increase in spending on house purchases, research from Savills has revealed.
The research found the total value of the UK housing market expanded by 6.3 per cent in 2024 to £376bn.
This equated to 1.1mn transactions at an average sale price of £348,822.
Savills head of residential research, Lucian Cook, said: “Total spending on UK house purchases shifted back into positive territory in 2024 as stability returned to the mortgage markets.
“While the total size of the housing market is below its pandemic peak of £521bn, it remains £36bn larger than immediately before the pandemic.
“Further interest rate cuts expected this year will mean that the range of buyers coming to the market will widen, and we can expect to see their spending power pick up over the next 12 months.”
Debt vs equity
The research revealed the increase in spending on house purchases was driven by a £24.3bn increase in the use of mortgage debt, an increase of 18.1 per cent.
However, while the equity put down by mortgaged buyers rose by £6.3bn, an increase of 9.5 per cent, spending among cash buyers fell by £8.4bn, a 5.4 per cent decrease, meaning cash and equity fell to 58 per cent on the total spend on housing.
The greatest increase in mortgage debt was among first-time buyers, which rose by £12.2bn or 21.4 per cent, which was fuelled by higher transaction levels and a slight easing in the average loan-to-value.
“The rise in first-time buyers reflects the overwhelming desire of Britons to get a foot on the housing ladder. Especially given the lack of choice in the private rented sector, and the double-digit rental growth tenants have experienced over the past few years,” Cook added.
“As a result, those who have been able to pull together a deposit have continued to take the plunge, despite higher house prices and mortgage rates,” comments Lucian Cook, head of residential research at Savills.”
Savills also found that, at a regional level, the greatest percentage increase in spending was seen in Northern Ireland where it increased by 13.4 per cent.
This accounted for just 1.4 per cent of the total size of the housing market.
London saw just a 2.3 percentage increase in spend, as the size of its housing market, which stood at £72.8bn, fell below that of the South East, 74.5bn, for the first time in two years.
tom.dunstan@ft.com
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