Confidence in the UK’s housing market reached a six-month low of 24% as buyers contend with rising housing prices and upcoming stamp duty changes, according to the latest Barclays Property Insights report.
Half of renters (51%) reported property prices as a main barrier to owning a home, up 11% from December. Similarly, 44% see the cost of a deposit as a major blocker, up from 37% in December.
However, renters are still hopeful despite rising costs, as one in five (23%) believe that home ownership is within their reach within the next five years, with three in 10 currently saving for a deposit (31%).
The property insights report also reveals that rent and mortgage costs edged up 2% year-on-year in January.
Despite this increase, consumers’ confidence in their ability to afford rent and mortgage payments remained unchanged month-on-month at 52%.
Anticipating the Bank of England’s recent decision to cut the Base Rate, consumer concerns around rising interest rates dipped slightly to 61%, down from 62% in December.
Barclays also reports that despite declining confidence in the housing market, many are still hopeful that housebuilding is the solution. Two thirds (65 per cent) believe that new builds are necessary to provide more housing in the UK, and two in five (42%) say that new build developments create a halo effect for communities, bringing economic benefits to the area.
Over two-fifths (42%) of UK adults say they would consider buying a new build, rising to over half of 18–34-year-olds (52 per cent). Compared to over 55s, younger generations are three times more likely to consider new builds better value for money than existing properties (34% of 18-43-year-olds vs 11% of 55+). Regionally, people from Northern Ireland (55%), London (51%), and the West Midlands (46%) would be most willing to buy a new property.
Three in 10 homeowners (28%) say they have previously purchased a new build property. The main factors influencing their decision were: that it was new (51%), desired location (51%), lack of property chain (38%) and modern features (35%).
These sit alongside environmental and economic factors. New homes are perceived as being more energy efficient (24%) as well as more affordable than older properties (20%).
In addition, Barclays customer spending on utilities dropped -10.1% in January, despite the recent increase in Ofgem’s energy price cap.
This comes as both renters and homeowners are considering how to make savings. Three in 10 homeowners (28%) say they are updating their homes to increase energy efficiency, whilst a fifth (21%) of renters are thinking about moving to a more energy efficient home, to save money on their bills.
Meanwhile, the Bank of England base rate (4.5%) has fallen from its peak of 5.25%, that does not necessarily mean that individuals’ monthly mortgage repayments are falling. Most mortgage holders surveyed (72%) report being on a fixed rate, which means that their repayments only change when their fixed term comes to an end.
Of those who have remortgaged in the past year (14%), nearly six in 10 (59%) say that their monthly repayments have increased, by an average of £242.70 a month, or £2,912.40 a year. This is likely because they had previously taken out a fixed-rate mortgage before mid-2022, when mortgage rates were lower than they are today. Meanwhile, 10 per cent say their monthly costs are now lower after remortgaging – likely those who took out a shorter-term product during the higher-rate environment.
Sian McIntyre, managing director of Mortgages and Savings at Barclays, said: “The start of 2025 saw a slight increase in mortgage and rental spend, though encouragingly this hasn’t knocked consumers’ confidence in their ability to make payments. This month’s reduction in the base rate was a further signal that we’re headed in the right direction.
“Housebuilding is increasingly a focus, with the nation’s outlook on new developments pragmatic, recognising the necessity for new builds as part of the solution to increase housing supply, as well as the advantages they can bring to both homeowners and communities. Ahead of April’s looming stamp duty changes, prospective buyers will continue to look for ways to pair aspiration and affordability, with energy efficiency a clear priority when choosing the right home.”
