Nationwide’s new Housing Affordability Report reveals that affordability has improved for house buyers across the country.
Straight away, we should say that this is not a sweeping surge in affordability where every mortgage application breezes through. Affordability is still stretched, particularly in London. There is, however, huge potential in a market like this, if you know where to look.
Foxtons CEO Guy Gittins says, “In fact, we’ve actually seen mortgage approval levels climb by 31% in the last 12 months versus the 12 months prior. At the same time, there’s been some 3.4% more homes sold across the UK market, with over one million transactions taking place over the last 12 months.”
What improved affordability looks like in London
While London saw the greatest improvement to affordability of any region, it’s still home to the highest house prices. That’s life in the big city – and it’s also a big reason people rate property ownership here so highly.
Guy Gittins comments, “In recent years the property market has performed well in the face of economic uncertainty and, even with higher interest rates and the resulting increase to mortgage rates, we are yet to see the appetite of the nation’s homebuyers dampened.”
Why has affordability improved?
Across the UK, the first reason behind affordability’s improvement is that the average growth in earnings is slightly higher than house price growth, giving homeowners more breathing room around those monthly outgoings.
The other reason, which we’ve found particularly motivated our buyers as of late, is that borrowing costs began to come down in 2024. As we predicted it might, sentiment has improved for lenders. This means the market carries less risk, which can benefit the amount of mortgages lenders offer and approve.
What’s going to happen to affordability in 2025?
Andrew Harvey, Senior Economist at Nationwide, thinks this momentum will keep things moving in the right direction for the UK, “Providing the economy recovers steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”
Guy Gittins weighs in with the London analysis: “We currently expect 2025 to bring more of the same and, certainly across the London market, we’ve seen a flurry of buyer activity already this year."
How this could affect you
There are many unique opportunities in a market like this. Here’s what you should be paying attention to:
If you're buying your first home
Two things you can do to seize new year momentum:
Talk to the Foxtons New Homes team to beat the clock for Stamp Duty savings. We’ve got local experts ready to help you search our incredible selection of new-build homes across the capital to find your perfect home. And with our smooth, streamlined buying process, we will get it done for you before the deadline hits.
Book your free consultation with Alexander Hall mortgage advisers to find out what you can afford. (You might be pleasantly surprised!) Affordability is going to be top of everyone’s minds this year, and the best thing about that is what lenders do with it. As we’ve said when they launched the 99% mortgage and Own New Rate Reducer, lenders are really thinking outside the box to get first-time buyers on the ladder. Our partner broker has an exceptional network of lenders, so they can find the innovative product that works best for you.
If you're selling property
If you’re thinking of selling a home, this is exactly the kind of market you want. House prices are strong, and we have buyers waiting. We'll help you get the right deal done. If you're also in the market to buy, our experts can help you find the perfect place and navigate the whole buying and selling processes simultaneously.
We’re off to a strong start this January, and you could be too – it all begins when you book a valuation:
Source: Featuring Nationwide's Affordability Index and our CEO's market insight, this article was carefully reviewed by Foxtons Sales department, to ensure you've got the best insight for your future move at your fingertips. If you have any questions on anything in this article, ask a Foxtons expert.