UK Rental And Mortgage Payments Reach Highest Level In 13 Months

According to the recently released Barclays Property Insights report, UK rental and mortgage payments have surged to their highest level in over a year, with an increase of 6.4% in October 2024. This marks the steepest growth in housing costs since September 2023, yet consumer confidence in the housing market is growing according to Barclays. Despite rising costs, the report finds that Brits feel more capable of managing housing payments, with 55% confident in affording their monthly rent or mortgage payments, up from 53% in September.

Increased Housing Costs, But Lower Concerns About Rental And Mortgage Payments

Although the cost of rent and mortgage payments is on the rise, the public seems less worried about housing expenses than in previous months. As of October, only 60% of UK residents expressed concern over rising interest rates—a slight drop from 63% in June. This comes after the Bank of England’s decision in September to hold the base rate steady at 5%, and while the rate decision continues to weigh on minds, many seem to feel more secure in managing housing payments, a sentiment that has reached its highest level of the year.

Younger People More Optimistic About Homeownership

The confidence seen in the report is especially evident among younger generations. Nearly half (47%) of renters aged 18 to 34 believe they’ll be able to buy a home within the next five years. However, homeownership prospects seem bleak for older generations, with only 28% of 35-54-year-olds anticipating they’ll ever own a home. The primary obstacles to homeownership are high property prices (cited by 69% of renters) and the cost of a deposit (60%). In fact, a third of renters report paying more for their rent this year compared to last, making it even harder to save for a deposit.

Utility Spending Declines As Consumers Conserve Energy

Interestingly, spending on utilities fell by 13% year-on-year, despite the energy price cap increase on the 1st of October. While prices remain lower than in 2023, the reduction in utility spending suggests consumers are more careful with their energy use. According to the report, 79% of UK residents are concerned about rising energy prices, and 42% worry about the impact of other household bills.

Younger Generations Eye Urban Areas, While Older People Lean Towards Downsizing

Winter is bringing a surge of interest in relocation, with 18% of people considering a move in the coming year. The report finds that young people aged 18-34 are particularly drawn to the idea, with 33% contemplating relocation to urban centres. In contrast, rural areas and coastal regions are more appealing to older demographics, while 15% of movers are even considering relocating outside the UK.

The main motivations cited are saving money (28%) and improving lifestyle or well-being (27%). Downsizing is also becoming a priority, especially among those over 55, with 37% considering a smaller property. According to Barclays’ “Right-sizing Revolution” report, incentivising downsizing could unlock an estimated 3.8 million homes, easing some housing pressures and potentially reducing property costs.

Hesitation Toward Home Improvements

Though spending on home improvements and DIY projects has dropped by 7.7% compared to 2023, nearly half of UK homeowners (44%) are still thinking about renovations. Many are motivated by a desire to increase their home’s sale value, though concerns remain that the current market may not yield the prices they anticipate.

Buyer Confidence Is Still Driving The Market

Summing up the market’s current state, Louis Mason, Communications Director at Oportfolio Mortgages, commented, “As housing costs climb, it’s crucial to see this uptick in consumer confidence, but it’s equally important for prospective buyers and renters that the market becomes more accessible. With the right financial planning and support, there’s reason to be optimistic for 2025, but affordability remains the biggest challenge to tackle.”

If you or anyone else you know is looking to purchase a new house, please feel free to get in touch with one of our advisors here at Oportfolio.