Industry braced for housing market revival as government reintroduces mandatory targets

According to today’s UK House Price Index from HM Land Registry, UK average house prices rose 2.2% in the year to May 2024, continuing the previous upward trend in April 2024, which saw a 1.3% increase. The average price of property in the UK in May was valued at £285,000. UK house prices have also risen 1.2% since the previous month.

The latest regional data also shows there was a significant variation in price rises across the UK, with Northern Ireland and Yorkshire and the Humber leading the way with the highest annual growth of 4%and 3.9%. However, London house prices only rose by 0.2% in the year to May, but on a monthly basis, London had the highest monthly prices increase of 3.9%.

Stacy Eden, partner at leading audit, tax and consulting firm RSM UK, comments: 'The latest house prices in May show that the market is making steady progress, as interest rates and inflation continue to ease. With ongoing housing shortages across the UK, this slight upward trend in house prices is likely to carry on. However, RICS has reported a moderate drop-off in buyer demand and an increase in listings, suggesting things are moving in the right direction for first time buyers. But, on a regional level, buyer demand is declining most noticeably in the South of England, showing a continued shift in consumer trends, with more households interested in looking for more affordable housing options outside of London and the South East.

'The fragility of the housing market’s recovery has been underpinned by falling number of transactions, which have decreased drastically in the last year. But, with the new government’s focus on housebuilding, it seems that industry has passed the critical point and is braced for revival. Businesses and trade associations including the BPF, have been encouraged by government’s announcement to bring back mandatory housing targets, invest in planning and focus on development, with plans to build 1.5m new homes in the next five years.'

He added: 'There’s a real opportunity for the government to assess the use of greenbelt land in order to provide more housing, with the current shortage leading to double digit rent price growth and housing purchase affordability challenges. While it is positive government is focusing on housebuilding for economic growth, another key driver is that it will help to create an equitable housing market, as approximately 80% of all housing wealth is currently held by over-50s. Increasing our housing supply will remove this shortfall and allow more of the younger generation to buy their own homes.'