Renting now more expensive than buying

As mortgage rates continue to fall, the monthly cost of buying a home has become cheaper.

Zoopla's research found that first-time buyers can save 17% on their monthly mortgage costs compared to the average rent. However, they may still need to save up a large deposit.

The difference between the mortgage rates was 2%.

The company says that house sales have reached their highest level since the Covid boom of 2020, and the pipeline has increased by 25% compared to a year earlier.

The estimate is that there are 306,000 homes where a sale has been agreed in principle. This is a 62,000 increase from a year ago.

Zoopla believes that the increase in buying and selling is due to a combination of lower mortgage rates, rising incomes and a drop in interest rates.

In 2023, when interest rates soared and the media was full of talk about a crash in house prices, many new homebuyers decided to put off their plans.

Many are taking the plunge now that house prices have risen and they can now secure mortgage rates between 4% and 4.5 %.

Zoopla reports that first-time buyers will account for 36% of all sales in 2024.

The next highest percentage is that of existing homeowners (31%), followed by cash buyers (27%), and landlords (7%) who buy with a loan.

Landlords who are selling their homes support the first-time buyer figures, since they tend to have lower asking prices.

Zoopla reports that 12 percent of the homes currently listed for sale were previously rented. London has a higher than average concentration of landlords selling their properties.

The average price for a previously rented property is £307,000. This is 16 percent lower than the UK average asking price, £365,000.

Prices of houses remain flat

The number of house sales may be booming but the prices are not.

Zoopla reports that house prices have risen by only 1% in the twelve months leading up to September 2024. This is a significant improvement from a drop of 0.9% a year earlier. 

Zoopla reports that a wide range of houses for sale is keeping house prices in check, while affordability pressures are holding down buying power.

The North-South divide in house prices continues.

In areas where house prices are more affordable, home values are increasing at a higher rate than the national average.

In East Anglia and South East England however, prices have fallen by 0.3 and 0.1 percent respectively in the last 12 months. South West England has not changed compared to the previous year.

Cities are the most popular. Belfast has the highest house price growth of 5.5%.

Manchester's average home prices have risen by 2.8%, while Glasgow and Liverpool saw a rise of 2.4%.

Zoopla expects mortgage rates to stay close to their current levels, with the majority of people borrowing between 4% and 4.5 % by 2025.

The wage growth is likely to be modest, and this will mean that the house price increase will not be enough to support affordability or buying power.

The report says that house prices will increase by a modest 2% in 2024.