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  • Writer's pictureConrad Binding

Outlook for the housing market and wider UK economy

  • Monitoring the outlook of various economic indicators gives us a good view on both the current and future direction of the UK’s housing market.

  • With 14 consecutive interest rate rises, the Bank Base rate reached 5.25% in August. Latest projections are that rates are likely to peak before the end of the year, having successfully begun to curb inflation.

  • Inflation is expected to remain ahead of target (2%) while wage growth remains high and employment continues to grow.

  • More stability is expected in 2024 with the UK economy now expected to avoid recession. Nationally, house prices falls seem inevitable, but with an election on the horizon, expect some new policy incentives for first time buyers. Source: #Dataloft. Average of independent forecasts made in the last 3 months. August 2023

Unlocking home ownership

  • With the close of the Help to Buy scheme, there is a clear gap for those looking for a low deposit solution to buying a home. Around 1 in every 100 households in the country live in shared ownership homes.

  • Shared ownership gives buyers the option to buy a share (between 25% and 75%) of their home, and pay rent on the remaining share. Over time more shares can be bought and the home can eventually be owned outright.

  • The required deposit (usually between 5% and 10% of the share bought) is significantly less than the average deposit of 24% paid by UK first-time buyers, making it an affordable option for home ownership.

  • Not exclusive to first-time buyers, those with a household income of £80,000 a year or less (£90,000 or less in London) and that cannot afford a home that meets their needs can qualify. Source: #Dataloft, Money Saving Expert, UK Finance, GOV.UK

Deposits vary by region for first-time buyers

  • To buy a home in the UK, first-time buyers have an average deposit of between £26,400 and £144,500.

  • The average deposit paid by a first-time buyer in the UK is 24% of the purchase price (UK Finance), with many putting down a larger deposit down for their first home.

  • Most expensive is London, where the average deposit is £144,500, almost a third of the average sale price.

  • Mortgages aimed at first-time buyers, such as the 100% deposit or the shared ownership scheme, can work out cheaper than renting and have helped many onto the property ladder. Source: #Dataloft, UK HPI, UK Finance

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