UK Housing Market Poised for Growth After Spring Budget

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Homebuyers Likely to Enter Property Market Despite Spring Budget

A recent survey of 1,002 current UK homebuyers indicates that the UK housing market might experience a significant increase in activity.

We have already seen investor demand, housing supply and estate agent instructions increase during the opening months of 2024. With homebuyers expected to dive back into the market as well, the year looks set to be much more productive than 2023.

Let’s look at the survey results in more detail.

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How Did Homebuyers Feel About the Spring Budget?

Home Sale Pack commissioned a survey revealing that most current buyers are delaying their search until they understand political intentions towards the housing market before the general election.

The survey shows that 82% of buyers are waiting for Jeremy Hunt’s Spring Budget statement before deciding whether to buy a new home.

Buyers hoped the government would introduce homebuying incentives in the Budget. 52% wanted pro-homebuyer policies like 99% mortgages or stamp duty relief.

However, the Budget didn’t include any such incentives. Yet, despite the disappointment, 78% of buyers still plan to move forward with their purchase.

Only 14% are further delaying their decision due to the Budget, and just 8% have abandoned their homebuying ambitions because of the lack of incentives.

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What Does This Mean for Buy-to-Let Investment?

So, is buy-to-let a good investment with more homebuyers entering the property market?

More homebuyers mean that we are probably looking at a healthier market. Mortgage rates are lower than they were, while inflation fell to 3.4% in March.

Property investors may face more competition for already-built properties, especially those in a property chain. As such, investors may want to rethink their strategy and consider alternative methods of buy-to-let investment, such as off-plan investment.

This involves purchasing a property straight from a developer, usually through a property investment company, before it is built. Investors can usually gain a discount on these properties and potentially see capital appreciation take effect more quickly, as those properties should rise in price by the time they are completed.

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Should Buyers Be Worried About Interest Rate Rises?

Since August 2023, the UK has maintained interest rates at 5.25%. Experts widely believe rates have peaked and will soon decrease, though this may not be until the second half of the year.

Yet, many homebuyers remain uneasy. Over half (54%) fear rates might rise again this year.

According to Home Sale Pack, 49% of buyers say they must reconsider affordability if rates increase.

Although another rate hike will give pause to many, most plan to proceed anyway; only 35% would abandon their buying plans if rates rise further.

How Did the Home Sale Pack Experts React to the Survey Results?

Co-founder of Home Sale Pack, Ruth Beeton, said: “There is clearly a real determination among hopeful homebuyers. They have been waiting for the market to settle down and hoping for some kind of government-led intervention to make buying that little bit easier, but even though no such incentives have been provided, and even though interest rates are yet to start falling, most buyers are gallantly holding firm and pushing forward with their plans to buy.

“Agents and other property professionals need to be ready for an increase in activity, and a big part of that is having systems and processes in place to ensure that each homebuying and selling journey moves as smoothly and efficiently as possible. By focusing on areas such as the better preparation and provision of upfront information, they will be better positioned to avoid the inevitable delays that come with a surge in market activity, like those we encountered during the market boom brought on by the pandemic stamp duty holiday.”

Want to know more about buy-to-let investment? Be sure to check out some of our buy-to-let area guides, including:

UK Housing Market Poised for Growth After Spring Budget