3 April 2024 – Property transactions are on a second monthly rise, as HMRC data shows 82,940 recorded sales for February.

On a seasonally adjusted basis, these figures are only 1% higher than January’s sales. The non-seasonal estimate accounted for 73,360 sales for February—9% higher than January, yet 3% lower than the annual basis.

Although these numbers may seem minimal, this growth bodes well for the long-term trends in the UK property market. 

More buyer confidence and optimism in the property market

This uptick in transactions sounds like good news for developers. Buyers may finally be more optimistic about the property market. 

Nick Lemming, chairman of Jackson-Stops, cites a 17% increase in home-mover activity compared to last year. Buyers are also taking advantage of the returning sub-4% mortgage rates. An influx of supply offers more choices for a wide variety of aspiring homeowners, from young families to downsizers. 

Supply will be around for a while, as Propertymark‘s Housing Insight Report highlighted a 129% increase in market appraisals undertaken.

The number of agreed sales was also 20% higher compared to the first quarter of 2023. Interestingly, the current rate is 7% higher than pre-pandemic numbers. 

Buyers are now more flexible with their budgets, especially those relying more on mortgage finance or looking for larger homes.

Record-breaking homes sold to first-time buyers

A third of all property transactions in the first quarter of 2024 go to first-time buyers. 

Data from Hamptons revealed that the South of England saw the most activity, with 50% of homes in London snatched up by first-time buyers. 

On that note, London has also had an increasingly expensive rental market for the past few years. This rental climate may have prompted renters to buy instead. 

Average house prices were around £422,660 in the capital. Although this is 5% more than in 2023, first-time buyers actually spent £108,710 less than they did in 2020. Mortgage rates were more affordable then, which made borrowing much more accessible. 

If this momentum keeps up, 2024 will welcome a projected 363,000 new homeowners – the highest number since 2009.

Smaller properties are the most sought-after

51% of first-time buyers bought one or two-bed residential properties, a rate not seen since 2011. In 2023, 49% bought homes with two bedrooms or smaller, while others purchased more spacious properties.

Flats were in higher demand this year at 28% versus 2022’s low numbers at 24% when supply was scarce post-Covid.

Properties priced £300,000 to £500,000 were the most sought-after, with 25% more activity than last year.

 […] with high mortgage rates curtailing their ability to borrow, most [first-time buyers] are compromising on a smaller home to get a foot onto the housing ladder.

Aneisha Beveridge, Head of Research at Hamptons

Lending and lowered inflation behind first-time buyer activity – not government support

In 2014, property transactions closed by first-time buyers were at 17%. The current rate is double that, so what changed?

Research from Hamptons revealed that first-time buyers were taking matters into their own hands – by taking advantage of lower inflation rates and high loan-to-value lending.

Although high LTVs are often riskier, buyers had no choice as this coincided with tightened regulations on buy-to-let. As landlords lost interest, there were fewer properties for renters who weren’t ready or didn’t want to buy a home.

This unprecedented move comes despite a limited package of government support measures. The market continues to be dominated by those who can afford to buy, rather than those who want to.

Aneisha Beveridge, Head of Research at Hamptons

Our Opinion

That the property market has picked up again might not surprise you. It didn’t surprise us, given that spring is generally the best time to sell a home. Of course, with the recent performance of the market and the economic landscape, nobody could be sure that it would be business as usual.

And the market is probably not yet back to its full strength, but the signs are good. With mortgage rates falling again and the Bank of England signalling that rate cuts might not be too far away now, many wannabe buyers and sellers seem to be more optimistic.

What did surprise us here at PropertyRoad is the fact that first-time buyers are back in the market. Because even though affordability might have improved slightly, with lower mortgage rates, buying a home in the UK can still be a challenge.

House prices are still sky-high, and borrowing costs are still at a higher level than two years ago. And while inflation has slowed, many people are still facing high prices. So what’s going on?

The high level of rental prices has probably something to do with it. It spurns first-time buyers on to get onto the property ladder. But they have to be more realistic to make this dream come true and the data suggests they are.

They are settling on smaller properties to get a slice of the homeowner pie. What is worrying though is that this will inevitable lead to higher prices, as demand increases. This will make it even more challenging for first-time buyers.

So the question is, how sustainable is the current situation? Sooner or later, something has to give. We will soon find out what it will be.