Return to pre-pandemic patterns evident in Britain's housing sector

Return to pre-pandemic patterns evident in Britain’s housing sector

Created: 10 Jan 2023

The turn of the year has been marked by data indicating a return to pre-pandemic patterns in the UK property market. London is now a focal point for home searches, outstripping coastal regions like Devon and Cornwall. First time buyers, as a proportion of total buyers, grew on an annualised basis whilst there has also been a surge in real estate listings since Boxing Day, potentially indicating a bounce back in the housing market.

First-time home buyers in the UK made up 53 per cent of all property purchases with a mortgage in 2022, according to research by the Yorkshire Building Society. This marks an increase from 50 per cent in 2021 and 41 per cent a decade ago. However, the number of new buyers fell 9 per cent year-on-year, declining to 370,287 in 2022 from a 20-year high of over 400,000 the previous year.

Mortgage rates in the UK had risen to 14-year highs of 6.65 per cent following the September mini-budget by then-Prime Minister Liz Truss. Rates have since stabilized below 6 per cent, but the higher borrowing costs are expected to cause a decline in house prices in the coming year.

London was the top location for home searches in 2022, according to Rightmove, with a 9 per cent increase from the previous year. Searches for homes in Cornwall and Devon fell 18 and 17 per cent respectively. This marks a return to pre-pandemic patterns, as London saw a 36 per cent increase in buyer searches compared to Cornwall, the largest gap since 2019.

The extension of the mortgage guarantee scheme and the rise in real estate listings since Boxing Day provides some relief for first-time buyers going forward. The mortgage guarantee scheme, which was set to expire at the end of 2022, has been extended to the end of 2023 to support those struggling to afford a deposit.

However, the predicted recession and higher borrowing costs may still pose challenges for first-time buyers.

The UK will extend its mortgage guarantee program, which helps people get on the property ladder, by one year in a bid to support the market through what the government called “difficult times.” The program, which started in April 2021 and sees the government offer lenders the financial guarantees needed to provide 95% mortgages on houses worth up to £600,000 ($730,000), was due to expire at the end of this month. It will now run to the end of December 2023, the Treasury said in a statement.

https://www.bloomberg.com/news/articles/2022-12-19/uk-to-extend-mortgage-guarantee-program-to-boost-housing-market#xj4y7vzkg

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