Rent and mortgage spending increased 1.8 per cent year-on-year last month, the lowest level of growth since August 2024, according to the latest Barclays Property Insights report.
However consumers’ confidence in their ability to afford their rental and mortgage payments dropped to 52% in December, the lowest level in 2024.
Concerns around rising interest rates rose slightly to 62% last month although 18% report feeling more optimistic in light of the recent Bank of England rate reduction.
Renters are still eying up the property ladder despite rising costs, with 22% believing that home ownership is within their reach within the next five years. However, obstacles remain – when identifying the biggest barriers to homeownership, 40% say property prices, and 37% say the cost of a deposit.
Seeking to overcome these obstacles and save for a deposit, demand for the ‘Bank of Mum and Dad’ is high for the year ahead, as 57% believe that it would be impossible to buy a home without an inheritance or loan from a family member.
Although perceived as a necessity, of those who have recently bought their first home, just 18% report having had financial help from family. Rather than ask for a lump sum, 12% opted to make use of a mortgage product which involves family members to increase their borrowing capacity.
Despite the prevalence of family support in the market, 35% of renters saving to buy a home reported building their deposit themselves, preferring to reach milestone independently. Meanwhile 17% are saving for a deposit with their friend or partner to help spread the cost.
Seeking support elsewhere, 29% opted to use a first-time-buyer scheme to assist their purchase, whilst a quarter locked-into a longer mortgage term to help reduce monthly costs.
Looking ahead to 2025, some 16% intend to move this year. Recent drops in house prices are a cause for optimism, with 9% considering previously unaffordable properties in more desirable areas to now be within their price range.
Topping the list of priorities among prospective buyers are: garages or driveways, gardens and functional spaces such as pantries or utility rooms.
Consumer spending on household items had its smallest decline of 2024 in December (-0.3%) as homeowners prepared for the festive season.
Meanwhile, future-proofing properties is front of mind, as 24% said they are updating their property to increase energy efficiency, whilst 28% are making improvements to increase the sale value of their homes. Planning ahead, 43% are considering renovating or redecorating.
Mark Arnold, Head of Mortgages and Savings at Barclays, says: “December brought an easing to the growth in rent and mortgage spending seen in previous months, as the Bank of England’s rate cut in November took effect.
“Saving for a first home remains a huge challenge in the market, with the Bank of Mum and Dad still perceived as necessary by many hoping to get on the property ladder. However, there is broader sentiment of cautious optimism and many renters are establishing strong savings habits to build a deposit in the current economic landscape. This is helped by the recent softening of house prices and imminent stamp duty changes.”
