"Whilst spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes. "
- Mark Arnold - Barclays
Growth in rent and mortgage spending increased to its highest rate in 13 months, at 6.4%, last month according to the latest Barclays Property Insights report.
Despite this increase, consumers displayed their highest level of confidence in the UK housing market this year, as well as in their ability to afford housing payments, with concerns over rising rent and mortgage costs reaching their lowest level since April this year.
55% of Brits are confident they can afford their monthly rental or mortgage outgoings – an increase compared to September (53%). Meanwhile, concerns around rising interest rates remained steady at 60%, down from a high of 63% in June 2024, following the Bank of England’s decision to hold the base rate at 5% in September.
When asked about their household expenses, 79% are concerned about the rise in the energy price cap, with 42% also worried about the impact of rising household bills. However, spending on utilities fell by 13% year-on-year despite the energy price cap rise on the 1st of October, as prices are still below where they were in 2023.
Still, the price difference isn’t sufficient on its own to account for the double-digit drop in spending, suggesting that consumers are also being more frugal with their energy consumption this year.
The rental confidence conundrum
26% of renters reported having confidence in the UK housing market, while 21% reported that the recent drop in inflation has made them more confident in their ability to afford their housing costs.
When asked ahead of the recent government Budget, young renters were hopeful about their prospects, as nearly half of 18-34-year-olds said homeownership is within their reach within the next five years. However, for older renters, this drops off, as only 28% of 35–54-year-olds think it will be possible in their lifetime.
Property prices are viewed as the biggest barrier to homeownership by 69% of renters, while 60% cite the cost of a deposit. Making matters more difficult, 32% note that their rental payments have increased over the last 12 months, impacting their ability to save for a property of their own.
Relocation, relocation, relocation
Brits have moving home on their mind as winter approaches. 18% are considering relocating in the next year, with relocating most popular among 18-34-year-olds (33%). UK cities are leading the charge for a desired location (30%) over the countryside (23%) and coast (20%).
Those living rent-free with family, friends or a partner are more likely to want to move to a city or urban area (40%), likely indicative of young people saving money ahead of a move for work.
Renters are the most inclined to make a move to the countryside (28%), whilst owners are more likely to want to move to a city (31%). Of those considering relocation, 15% are looking to move away from the UK completely.
For those wanting to relocate, saving money is stated as the primary reason (28%), followed by improving lifestyle or wellbeing (27%) and being closer to friends or family (21%).
18% of those wanting to relocate said their motivation was to downsize, with this rising to 37% amongst over 55s.
This follows the recent Barclays Property Insights report, “Right-sizing Revolution: unlocking untapped capacity in the housing market” which recommended a number of policy changes to help make right-sizing more desirable. The report found that if properly incentivised, right-sizing could unlock an estimated 3.8 million homes in the housing supply.
Retro regret as Brits turned off by home décor dealbreakers
Although overall spending on home improvements & DIY was down compared to 2023 (-7.7 per cent), 44% of Brits reported that they are thinking about renovating or decorating their home in the near future.
27% are considering making improvements in order to improve the sale value of their property, with 20% admitting concerns that they won’t be able to sell their property for what they believe it’s worth.
However, property updates don’t always have the desired effect for prospective buyers as 63% of Brits reported having a housing design feature that turns them off a property.
Topping the list of property turn-offs is the re-emerging trend of avocado bathroom suites (27%), particularly unpopular amongst over-55s (35%). This is followed by shaggy carpets (17%) and textured wallpaper (17%).
Mark Arnold, Head of Mortgages and Savings at Barclays, said: “The housing market can be fickle, with housing trends and macro-economic factors having a direct impact on the monthly outgoings of millions of Brits.
"However, what truly drives the state of play is how confident consumers are feeling. Whether contemplating a relocation, purchasing a first home or redecorating, we can see that Brits have growing faith both in the housing market and in their ability to spend.
“Whilst spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes. Even if interest rates fall as predicted, if this confidence is to be rewarded, more needs to be done to unlock greater capacity in the market to help drive down some of the financial barriers facing renters and homeowners as we look ahead to 2025.”
