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Exploring the Future of the UK’s Property Market
In the past few years, global events have significantly impacted consumer behaviour, particularly in the UK’s housing sector, contributing to soaring inflation and a decline in consumer confidence. Coupled with a global energy crisis, these factors prompted a rise in interest rates as the government sought to control inflationary pressures.
This confluence of events caused a slowdown in the housing market. Higher interest rates dampened mortgage demand, leaving many prospective buyers feeling that homeownership was financially unattainable.
This situation especially affected “empty nesters”—parents whose children have left home—who found themselves hesitant to make their next move on the property ladder.
A recent Property Insights report from Barclays compiles this data to provide a credible snapshot of the current property market and examines key trends affecting consumers.
For example, their report from early August revealed that over half of surveyed consumers felt more confident about their household finances following changes in the Bank of England’s base rate. It’s important to note that existing mortgage holders on fixed rates won’t immediately benefit from base rate reductions. However, there’s a growing trend of people opting for shorter-term mortgages of two to three years, anticipating that rates will decrease in the near future.
In recent months, there’s also been a noticeable increase in renters and homeowners engaging with news about the UK economy. Nearly one in six individuals reported becoming more informed to better understand factors influencing their housing costs. This heightened awareness is encouraging, as it empowers consumers to make informed financial decisions when the time comes.
Building Consumer Confidence
Looking ahead, Barclays observes that estate agents are reporting a record number of customers returning with renewed interest in the property market. This suggests that the final quarter of the year could see significantly more market activity compared to the traditionally quieter summer months.
While many believe that interest rates are the primary driver of the mortgage market, we contend that consumer confidence plays an even more critical role. Making one of the largest purchases of your life requires confidence in a stable economy, controlled inflation, and predictable expenses. This stability influences spending behaviours across the board, even among renters.
Encouragingly, Barclays’ latest report finds that consumer confidence in household finances is on the rise, aided by reductions in energy bills and a slowdown in spending growth on rent and mortgages. Additionally, wage increases are expected to boost disposable income. With inflation under control and the possibility of another interest rate drop later this year, we’re optimistic that this fresh wave of confidence will carry through the rest of 2024.
If you’re looking to move in 2024 or are thinking ahead to 2025, now is time to book a no obligation, free, bespoke consultation from our Valuation Team at Aston Knowles. Contact us today on:-
📧 enquiries@astonknowles.com
☎️ 0121 362 7878
