Total value of the UK housing market up 6.3% last year

The total value of the residential housing market swelled by 6.3 per cent to £379billion last year, new data shows. 

The size of the housing market remains below its pandemic peak of £521billion reached in mid-2021, but was £36billion bigger than immediately before the pandemic 

There were 1.1million residential property transactions in 2024, with an average sale price of £343,922, Savills says.

The amount being spent on residential property increased by £22.3billion in 2024 on the previous year. 

‘Total spending on UK house purchases shifted back into positive territory in 2024 as stability returned to the mortgage markets’, Lucian Cook, head of residential research at Savills, said. 

London saw just a 2.3 per cent rise in spend, as the size of its residential housing market, which is around £72.8billion, fell below that of the south east of England for the first time in two years. 

The largest percentage increase in spending on residential housing was seen in Northern Ireland, with a rise of 13.4 per cent year-on-year.

Across Britain, the £22.3billion upturn in spending on house purchases was driven by a £24.3billion, or 18.1 per cent, increase in the use of mortgage debt, according to Savills.

However, while the equity put down by mortgaged buyers jumped by £6.3billion, or 9.5 per cent, spending among cash buyers fell by £8.4billion, or just over 5 per cent. 

This meant cash and equity fell to 58 per cent of the total spend on residential housing last year, the findings suggest.

The largest increase in mortgage debt was among first-time buyers. In the first-time buyer category, mortgage debt surged by 21.4 per cent to £12.2billion, fuelled by higher transaction levels and a ‘slight easing’ in the loan-to-value ratio. 

Lucian Cook adds: ‘Further interest rate cuts expected this year will mean that the range of buyers coming to the market will widen, and we can expect to see their spending power pick up over the next 12 months.’

He added: ‘The rise in first-time buyers reflects the overwhelming desire of Britons to get a foot on the housing ladder. Especially given the lack of choice in the private rented sector, and the double-digit rental growth tenants have experienced over the past few years.

‘As a result, those who have been able to pull together a deposit have continued to take the plunge, despite higher house prices and mortgage rates.’ 

Cook said the government’s ambitious housing targets meant it had a vested interest  in overseeing a ‘stronger recovery in the size of the housing market.’

He added: ‘With constraints on public finances, it looks like that will need to be rooted in relaxation in mortgage regulations to further increase first-time buyer activity.

‘Meanwhile, an improvement in activity among home movers is heavily dependent on further cuts in interest rates and an improvement in consumer confidence.’ 

Under the stamp duty changes which will happen on 1 April, first-time buyers could pay up to £5,000 more on their home purchase than they would currently, and home movers could pay £2,500 more. 

This is because the house price thresholds at which someone starts to pay the tax are being reduced, back to the level they were at before the Conservative government made temporary changes in 2022. 

Last week, the Nottingham Building Society launched two new fixed rates with a hefty £2,500 and £5,000 cashback, for those buying properties worth £250,000 or more.

The £2,500 cashback mortgage is for buyers who have a 25 per cent deposit or equity from their existing home, and has an interest rate of 5.28 per cent.

The £5,000 cashback mortgage is for those with a 10 per cent deposit or equity, and has an interest rate of 6.15 per cent.