Housing market confidence is stable and average deposit requirements are falling, however, affordability remains a challenge for aspiring homeowners and conveyancing and process delays cause completion timelines to slow across the market, according to the latest insights from Barclays.
Confidence in the UK housing market strengthened to 26% in May from 23% in April, indicating a modest improvement in sentiment. However, renters remain hindered by affordability concerns. The cost of a deposit needed to buy a home (37%) and high property prices (36%) were cited as the biggest barriers to homeownership for renters, compared to just 16% highlighting monthly mortgage payments.
Deposits decline, but regional gaps remain
One in seven Gen Z adults (14%) report changing their budget or lowering their housing expectations due to affordability pressures. The appetite to buy is nevertheless strengthening; 16% of Gen Z renters say they are actively searching for a property to purchase, up 9% month-on-month.
Average deposit values across all ages fell 16.4% year-on-year to £57,209, though figures vary significantly across the UK. In most regions there was a decline, due to a range of factors such as stagnating house prices and reduction in sales of high-value properties. London recorded one of the sharpest drops in deposit size, down 27.2% to £136,057, while the South East and East Anglia also saw a significant average decrease.
A two-speed market: transactions delayed while remortgaging accelerates
Delays and complications in house purchases have increased. Nine in 10 (88%) buyers and sellers from this year report experiencing delays, while 29% have had a property purchase fall through. This is reinforced by Barclays mortgage data, which shows that the average time from final mortgage offer to completion date has increased by 21.7% year-on-year. The most common sticking points cited are conveyancing issues (21%), estate agent delays (19%) and difficulty finding suitable properties (18%).
Uncertainty is also affecting some households’ plans. One in three consumers (30%) say they are now more likely to delay buying or selling because of economic volatility, while a third (32%) are increasing their savings or cutting back on spending in case of future impacts on their costs.
The rate environment is simultaneously driving a more proactive response among existing homeowners. More than two-fifths (42%) of mortgage holders surveyed say they are now more likely to lock in an interest rate for remortgaging early. This coincides with an increase in remortgage activity - which accounted for 40.6% of Barclays completions in May, up from 30.7% a year earlier.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: "Adaptability has become the hallmark of the modern buyer. First-timers remain constrained by affordability, but will be flexible to achieve their goals, making trade-offs on location or property features to get on the ladder.
“Meanwhile, existing homeowners are acting more decisively, with many locking in rates earlier, or shifting their plans in response to volatility. Together, these trends may make for a more complex housing landscape, but reflect a clear determination among consumers to take control of their financial future.”
Julien Lafargue, chief market strategist at Barclays, added: “The expected reopening of the Strait of Hormuz and the associated drop in oil prices mean that inflationary pressures may be more contained than feared in the coming months. This should give the Bank of England some breathing room, allowing the central bank to keep interest rates unchanged for the time being. Although any renewed political uncertainty could represent a headwind in the short-term, the picture appears to be gradually improving for the UK real estate market.”
