UK house prices cool down in 2024

Buying a new home in Britain became a little more affordable this year as average wages rose faster than house prices and mortgage costs, the country’s largest mortgage lender said on Thursday. Halifax, part of Lloyds Banking Group (LLOY.L), s

By: cyprus-mail.com

Nov 29 2024
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UK house prices cool down in 2

Buying a new home in Britain became a little more affordable this year as average wages rose faster than house prices and mortgage costs, the country’s largest mortgage lender said on Thursday.

Halifax, part of Lloyds Banking Group (LLOY.L), said the average house in the third quarter of 2024 cost 6.55 times the mean annual full-time income, down from 6.62 in 2023 and a record high of 7.24 in mid-2022.

The cost of servicing a new mortgage dropped to its lowest in just over two years at 29 per cent of average income, down from 33 per cent a year ago, based on a mortgage with a 30-year term, a five-year fixed interest rate and a 25 per cent deposit.

“While homes are becoming more affordable, the progress has been gradual,” Halifax’s head of mortgages, Amanda Bryden, said.

“Buying a property remains a significant challenge for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade,” Bryden said.

The Bank of England raised interest rates to a 15-year high of 5.25 per cent in August 2023 and started to cut them in August this year followed by a further reduction to 4.75 per cent this month.

Economists polled by Reuters last week expected the BoE to cut rates to 3.75 per cent by the end of next year, while they predicted house prices would rise by 3.1 per cent next year and 4 per cent in 2026.

Halifax said the average house price in the third quarter of 2024 was 292,508 pounds ($368,823), barely changed on two years ago, although prices vary widely across the United Kingdom even after taking regional wage differences into account.

Housing was least affordable in southeast England and in London – where new mortgages cost 39 per cent and 36 per cent of local salaries – and cheapest in northeast England at 19 per cent and Scotland and Northern Ireland at 22 per cent of local full-time earnings.