This week was heavily focused on redrawing planning lines, to better house future generations. Expectations for a bullseye were low but dogged belief and determination to boost housing supply left the government impervious to objections. Developers, who had a shocking year, are pleased but many won’t act until borrowing comes down for both them and buyers. Welcome to another UK Property News Recap – 13.12.2024
Rayner takes control
Angela Rayner had a busy week, laying out her planning framework for the future. To kick start, it was announced that mayors are to be given a bigger role in planning decisions. Moving forward they will be able to greenlight larger developments without “council” or having to consider the public’s voice.
In addition, Rayner plans to connect the brown, grey, and green dots to form a bigger UK housing picture. Developers will welcome this mid-to long term, but nothing will happen in the short term until buyers can afford to buy and builders build. Housing numbers may improve eventually, but new housing estates that piggyback off the back of the UK’s existing creaking infrastructure may struggle with an increase in volume.
Rayner’s housing target, while admirable, is a hard sell to developers if there isn’t any financial incentive. This may explain why the government watered down their previous promise of 50% affordable housing on the green belt.
The additional £100m for council planners and 300 extra planning officers is welcome, but it still doesn’t resolve the issue of who will build all these homes, at speed, when it’s not in developers’ interest to flood the market, and they don’t have enough construction workers to hit existing targets let alone the 370,000 bullseye.
The Mortgage search retreat
The Twenty7tec mortgage market report showed the impact the upward trajectory of rates in November had on buyers who were seen fleeing the mortgage scene.
In November 2024, compared to October 2024, all mortgage searches were down:
- Purchase mortgage searches were down 11.1%
- Remortgage searches were down 8.6%
- Buy To Let purchase mortgage searches were down 14.60%
- Buy To Let remortgage searches were down 6.5%
- Residential purchase mortgage searches were down 11.3%
- Residential remortgage searches were down 8.6%
- Searches by First Time Buyers were down 9.2%
For those looking to move, the housing bracket that continued to show the most movement was priced between £250,000-£500,000. This drive was led by first time buyers keen to make the stamp duty deadline and buy-to-let investors who don’t need to borrow a lot to achieve a good return.
The Affordability Conundrum
The cost of buying an average home in England is now unaffordable, according to the ONS house purchase affordability report.
Only the richest 10% can afford to buy as figures show the average household needs 8.6 times disposable income in England to meet asking prices. In Wales it was 5.8, Scotland 5.6 and Northern Ireland 5.0.
The areas that float closer to the affordability line also happen to be the same areas which have continued to see larger house price growth. Those sailing high, less so.
A lot can backfire in a month.
The average mortgage rate on a fixed five year home loan has increased from 5.09pc at the start of November to 5.28pc and the average two year fixed rate by 0.13 percentage points to 5.52pc according to Moneyfacts, leaving wannabee borrowers conflicted as to when best to make their move.
Savills Rental Predictions
UK rental growth in prime markets, according to Savills, is expected to swell over the next two years before slowing in 2027, as non-doms consider where is the most financially viable location to lay down roots.
Given this and the incentive to buy being “stamp”ed out, renting becomes the more affordable option for those with wealth in the short term.
Rental rises slow but still persist to pester renters
Zoopla’s November 2024 rental index showed that the 19% rise in earnings over the past three years didn’t cover the 27% rise in rents. As more landlords and first time buyers bow out and immigration continues to swell; further rent rises are expected in those areas with “room to grow”, against those areas where tenants are struggling to reach. This is demonstrated by annual rental inflation in Northern Ireland which was up 10.5% compared with 1.3% in London.
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RICS residential market survey November 2024
In RICS’s residential market survey, house prices were reported to be up in almost every region, Wales and Yorkshire and Humber being the exception, with further rises expected over the next 3-12 months.
Despite listings rising and demand remaining consistent; the upshot of rates backtracking in November 2025 meant agreed sales also retreated.
Valuations ticked over, but the impetus to sell was restrained. Many are waiting until there is another rate adjustment which will then see sellers “spring” into action.
Turning to the rental market, surveyors reported that demand appeared to slow which is somewhat typical for the time of year. Post-hibernation demand will return to find limited stock, which will further drive up rental prices till they are knocking on affordability thresholds.
Developers’ operating profits crumble
The Top 150 Contractors and Housebuilders list showed firms in the sector generated a combined £118.4bn in the firms’ most recent reporting year – which for the vast majority has a year end in 2023 or 2024 – 2% up on the previous year.
While contractors increased their aggregated turnover by 8%, housebuilders’ revenue fell by 10%.
Gratte Brothers was this year’s fastest riser, jumping 41 places up the table this year from 144th to 103rd but Balfour Beatty retained its position as number one.
The Vistry group had the biggest rise in turnover, as it “banked” on affordable housing, while Barratt, was the biggest faller, the groups turnover dropping £1.2bn, followed by Persimmon with £1bn.
Rightmove’s Christmas wish list
Property portal Rightmove sent you its predictions for the new year which all hinged on rates reducing.
- New seller average asking prices will rise by 4% by the end of next year, and around 1.15 million transactions are expected, however 2025 is set to be a buyer’s market
- Beginning of price resurgence for London market predicted, following years of price lag
- Average mortgage rates predicted to fall to around 4.0% by the end of next year, driven by four Base Rate cuts in 2025
- First-time buyers to be particularly active in 2025 despite stamp duty rising from April 1st
- Remortgaging set to be focus for lenders, as Covid five-year fixes, and post-mini-Budget two-year fixes mature, with Rightmove launching a remortgage rate tracker to report trends in 2025
Construction output stalled in October 2024
Repairs and maintenance got sidelined in October 2024, as output in the sector fell 3.8% on the previous month. Meanwhile infrastructure and new work gained some momentum but not enough to stop overall monthly construction output from falling 0.4% as the industry waited to hear whether the budget would enable or hinder progress.
Councils click and collect from second homeowners to replenish depleted funds
To stop local homes from being snapped up at foreign prices, the government is doubling council tax for second-home owners from April the first. This will help line councils’ holey pockets so long as second homeowners don’t sell up first.
And that concludes another UK Property News Recap – 13.12.2024. If you have any comments or suggestions, please get in touch here
