UK Housing Market Mid-2024: Recovery Amid Challenges

Residential Property Review June 2024

Housing market update

The UK housing market continues to show modest signs of recovery, according to the latest data from Savills. 

Despite some house price growth, a significant upturn is unlikely until mortgage affordability improves. 

Buyer activity continues to improve, as the number of sales agreed in May was 10% higher than the 2017-2019 average, according to TwentyCI. 

The rental market remains relatively consistent. Data from Zoopla shows that, in April, annual UK rental growth was 6.6% - slightly lower than the 6.7% recorded in the previous month. The region with the strongest annual growth was the North East (9.5%), followed by Scotland (9.3%). Rental growth is accelerating in locations close to large cities, such as North Tyneside and Midlothian - more evidence that the pandemic’s ‘race for space’ appears reversed.  

New homes in the capital - demand outstrips supply

Demand for new buildings in the capital is increasing, but supply is limited due to high development costs. 

Knight Frank data indicates confidence is picking up among London buyers. In April, the number of offers placed on new homes increased 9% year-on-year, while viewings rose 17%. Similarly, for mid-to-upper markets, the number of prospective buyers interested in purchasing a new build was 15 to 20% higher than the previous year. 

Despite this growing demand, building costs in the capital have put off some developers. As a result, new starts fell by 20% over a 12-month period, and about 35,000 new homes are being delivered per year – over 30% lower than the Mayor of London’s target of 52,500. 

How will the General Election affect the housing market? 

Ahead of the 2024 General Election, new homes are the unanimous focus of the manifestos regarding housing. 

If the Conservatives remain in government, Rishi Sunak aims to build 1.6 million new homes over the next five years – slightly more than the Labour Party’s target of 1.5 million and less than the Liberal Democrat’s promise of 380,000 new builds per year. Ed Davey stated that 150,000 will be social housing; Keir Starmer prioritises building new social rented homes.

The Labour, Liberal Democrat and Conservative manifestos pledge to fully abolish Section 21 ‘no fault’ evictions. Davey also pledged to create a national register of licensed landlords and make three-year tenancies the default. 

If the Labour Party comes to power, they propose increasing the Stamp Duty rate for non-UK residents. Meanwhile, the Conservatives would abolish Stamp Duty for first-time buyers (FTBs) on homes up to £425,000. To further support FTBs, Sunak promised a new and improved Help-to-Buy scheme. Similarly, the Labour manifesto pledged a permanent mortgage guarantee scheme.

All details are correct at the time of writing (19 June 2024)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice, and the accuracy and completeness of the information cannot be guaranteed. It does not provide individually tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applied or proposed and are subject to change; their value depends on the investor's individual circumstances. No part of this document may be reproduced without prior permission.

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Executive Partner, Residential Property, Brentwood office

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Anne Elliss, partner and conveyancing specialist in Brentwood | Tees Law

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