The latest Barclays Property Insights report has revealed that rent and mortgage spending increased 1.8% year-on-year last month, the lowest level of growth since August 2024.

Costs continue to increase, and consumers’ confidence in their ability to afford their rental and mortgage payments dropped to 52% in December (down three percentage points), the lowest level in 2024.

Concerns around rising interest rates rose slightly to 62% last month (up three percentage points), although they remain below the 63% high recorded in June 2024. The Bank of England’s decision to reduce the base rate to 4.75% in November mitigated some of these concerns, with one in five consumers (18%) reporting feeling more optimistic in light of the recent rate reduction.

HOME OWNERSHIP

Barclays found that renters are still keen on getting onto 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% cite the cost of a deposit.

Looking 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% of renters believe that it would be impossible to buy a home without an inheritance or loan from a family member.

Although seen 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, one in 10 (12%) opted to make use of a mortgage product which involves family members to increase their borrowing capacity, for example Barclays Family Springboard Mortgage.

INDEPENDENT SAVING

Despite the prevalence of family support in the market, over a third (35%) of renters saving to buy a home reported building their deposit themselves, preferring to reach milestone independently. Meanwhile, nearly one in five (17%) are saving for a deposit with their friend or partner to help spread the cost.

Seeking support elsewhere, three in 10 new homeowners (29%) opted to use a first-time-buyer scheme to assist their purchase, whilst a quarter (25%) locked-into a longer mortgage term to help reduce monthly costs.

Of those saving for a deposit, 15% have family that are unable to contribute, while one in 10 (10%) have had offers of support for a deposit contribution from parents and/or family members.

To save for their housing fund, many are reviewing and trying to reduce monthly bills (41%), which may be a contributory factor to the -6.7% drop in utilities spending, despite rising energy prices. Other measures include reducing discretionary spending (39%), signing up to cashback rewards (33%) and cutting back on holidays (31%).

30% report having moved home in the last three years. Lifestyle improvements were the biggest motivation for moving (17%), followed by wanting to be closer to family and friends (17%) and finding a bigger home (15%).

Looking ahead to 2025, one in six homeowners (16%) intend to move this year. Recent drops in house prices are a cause for optimism, with one in 10 (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 (40%), gardens (39%), and functional spaces (32%), such as pantries or utility rooms.

ENVIRONMENTAL CONCERNS

A quarter of homeowners (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, four in 10 (43%) are considering renovating or redecorating.

“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”

Mark Arnold, head of mortgages and savings at Barclays, said: “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, which have motivated both potential buyers and sellers to act swiftly.”