New mortgage rules boost UK home buying

Zoopla's report indicates how changes in mortgage assessments are impacting home prices in the UK.

New mortgage rules reshape UK housing market dynamics

The UK housing market has avoided its usual summer lull, bolstered by increased home loan amounts, as reported by Zoopla. Despite this, the organization has reduced its house price forecast for 2025 due to rising stamp duty costs which buyers are factoring into their offers. As of June, the average house price reached £268,400, a modest rise of 1.3% from last year. Richard Donnell, Zoopla's executive director, noted that the market is "broadly in balance" as the influx of new properties aligns with buyer demand. Interestingly, buyer activity in July has seen an 11% increase compared to last year, translating to an 8% rise in agreed sales. Much of this activity is attributed to government-backed changes in mortgage affordability guidelines, allowing buyers to borrow up to 20% more than before. Despite the cautious optimism among buyers, house price growth remains uneven, especially between regions, with southern areas demonstrating considerably slower growth.

This report highlights a shift in the UK real estate landscape, where changing mortgage assessments are helping to stimulate demand without triggering significant price inflation. The fact that more homes are available is reinforcing a buyer-friendly market, which is a marked shift from previous years characterized by high competition and soaring prices. Though there is excitement about the increased borrowing capacity, caution is warranted about potential future economic pressures, such as persistent inflation and changing government policies that could impact affordability and demand.

Highlights

How this balance evolves will be crucial in shaping the future market landscape.