405, 000 £ 539, 732 - 3. 1% £ 292 £ 832m 56
ORTGAGE AP P ROVALS (OCT)
RESILIENT MARKET
The outlook for 2025 is cautiously optimistic, with increasing buyer activity and a growing sales pipeline. Affordability, while still stretched, is improved compared to a year ago, while mortgage rates below their recent peak and inflation coming under control are expected to unlock pent-up demand, creating modest upward pressure on prices.
LOOKING BACK LOOKING FORWARD
Inflation started 2024 at 4.0% and has steadily come under control throughout the year (ONS). Despite a higher than expected reading of 2.3% in October, it is forecast to remain close to its 2% target throughout 2025. Interest rates have fallen by 0.5 percentage points since August, down from 5.25% to 4.75% in November, giving an optimism boost to the market. Interest rates are not expected to reach the lows of the last decade anytime soon, instead forecast to drop to 4% or lower by the end of 2025¹. Average asking prices for new sellers are predicted to rise 4% in 2025, the highest forecast since 2021 (Rightmove).
PRICE GROWTH
House prices grew 3.7% in the year to November, their fastest annual pace for two years after seeing the largest month-on-month increase since March 2022 (Nationwide). Low levels of unemployment, combined with wage growth outstripping inflation, is helping underpin the housing market. In the North East, the prime markets of Gateshead and Stockton-on-Tees are currently the best performing.
STRONG PIPELINE
Mortgage approvals reached 68,303 in October, a 42% year-on-year increase and the highest level since August 2022 (Bank of England). Despite mortgage rates not having come down since the budget, average mortgage rates have been steadily dropping since spring, now over 160 basis points lower than in summer 2023 (Halifax). The sales market is on track for 1.1m sales completions over 2024, a 10% increase compared to 2023, with the current sales pipeline 30% larger than at the same time last year (Zoopla). Supported by rising incomes and changes in the way lenders assess affordability,
5% more sales are forecast over 2025 compared to 2024. People’s motivations to sell and move are commonly underpinned by needs rather than aspirations. Over 1 in 5 moves are ‘needs based’, driven by factors such as moving near family, rising costs, divorce/ separation, and job relocation2
IMPROVING AFFORDABILITY
Moderate house price inflation, coupled with strong wage growth, means buying a home is becoming more affordable relative to income (Halifax). Over the last year, average earnings have climbed by +5%, outpacing house price growth. Mortgage costs are also lower than where they were a year ago in each region of the UK, encouraging news for buyers. In the North East, mortgage costs as a percentage of income fell to 19.0% from 22.6% between Q3 2023 and 2024³. However, affordability still remains stretched for many, with prices still near record highs and interest rates likely to stay higher than we’ve been used to over the past decade.
ENGLISH HOUSING SURVEY
The English Housing Survey ⁴ has released its latest findings on demographics and resilience of households across England. The survey reports there were 975,000 first time buyers in England in 2023-24, 15% of whom were in London. Buyers are accessing the housing ladder later in life with the average age of first time buyers now at 33.8. Meanwhile, home ownership is still the ambition for many renters. Over half (57%) of private renters expect to buy a property at some point in the future equating to 2.6 million households. A quarter of these renters are looking to buy a home within the next 2 years. Owner occupiers reported higher scores for life satisfaction, feelings of life being worthwhile, and happiness, while scoring lower for anxiety compared to other tenures.
£ 5 1 4 ,0 0 0
£ 7 0 5 ,2 2 8 -2 .7 %
£ 3 7 2
£ 5 7 2 ,0 0 0
£ 7 5 5 ,8 7 7
-2 .8 %
£ 3 8 3
£ 4 7 4 ,0 0 0
£ 6 1 4 ,7 9 1
-3 %
£ 3 3 4
£ 7 4 2 ,0 0 0
£ 1 ,0 0 6 ,2 9 8
-4 .9 %
£ 4 9 0
£ 9 2 5 ,0 0 0
£ 1 ,3 0 7 ,0 4 4
-8 .7 %
£ 5 7 0
£ 4 0 5 ,0 0 0
£ 5 3 9 ,7 3 2 -3 .1 %
£ 2 9 2
£ 4 9 6 ,0 0 0
£ 6 7 1 ,5 0 7
-3 .4 %
£ 3 4 9
£ 5 2 4 ,0 0 0
£ 6 9 1 ,5 4 1 -1 .1 %
£ 3 4 0
£ 7 9 4 ,0 0 0
£ 1 ,0 7 7 ,6 6 4
-4 .5 %
£ 5 2 9
£ 1 ,5 7 0 ,0 0 0
£ 2 ,5 4 7 ,0 7 8
-1 0 .8 %
£ 1 ,2 3 3
£ 4 7 4 ,0 0 0
£ 6 3 9 ,9 1 1 -0 .7 %
£ 3 0 7
£ 3 5 3 ,0 0 0
£ 4 9 1 ,1 4 2 + 5 .6 %
£ 2 8 4
£ 4 2 4 ,0 0 0
£ 5 3 8 ,3 5 2
+ 2 .9 %
£ 3 0 9
£ 2 4 2 ,0 0 0
£ 3 3 4 ,9 8 8
-5 .1 %
£ 2 0 2
£ 3 8 7 ,0 0 0
£ 4 7 2 ,0 7 3
-6 5 %
£ 2 6 4
£ 3 9 2 ,0 0 0
£ 5 0 6 ,2 1 0 -1 2 .2 %
£ 2 8 1
£ 3 5 8 ,0 0 0
£ 4 8 1 ,1 9 0 + 3 .1 %
£ 2 5 0
£ 3 0 6 ,0 0 0
£ 3 8 2 ,2 2 2
-9 .8 %
£ 2 3 6
£ 2 8 8 ,0 0 0
£ 3 6 0 ,0 4 1 -7 .1 %
£ 2 0 5
£ 3 8 5 ,0 0 0
£ 5 0 0 ,4 5 4
-2 .3 %
£ 2 7 0
£ 3 9 3 ,0 0 0
£ 5 3 0 ,3 3 0 + 4 .8 %
£ 2 6 7
N O R T H E A S T P R E M I U M M A R K E T
NORT
EAST
NORT H EAST
£139,518
£405,000
£539,732
£98,523
£250,000
£318,141
£102,151 £317,000 £418,594
£155,292
£328,000
£439,105
£291,150
£604,000
£789,530
£145,415 £420,000 £555,693