House prices are being driven upwards as a record number of first-time buyers enter the market.

The UK housing market is bouncing back. Brits spent £88.3 billion on houses and flats in the second quarter of 2024, an 8% jump compared to last year, according to Savills. This rise takes the total spend on property over the past year to over £350 billion – that’s even higher than before the pandemic!

So, what’s fuelling this buying frenzy?

• Cheaper Mortgages: The amount of money being lent out for mortgages has shot up by 22%. Why? Because things have settled down in the mortgage market, making lenders more confident about offering better deals.
• First-Time Buyers Are Back: A massive 24% of all the money spent on property came from first-time buyers. That’s the biggest proportion they’ve made up in eight years!

What’s next for house prices?

Lucian Cook, a top expert on the housing market at Savills, thinks things are only going to get busier: “As interest rates keep falling, we expect to see even more people buying and selling homes over the next year. Lower mortgage costs will tempt back those buyers who were put off by higher monthly payments.”

Cook also thinks we’ll see more people looking to move up the property ladder, especially after putting their plans on hold because of pricey mortgages. He suggests some buyers might wait to see what the government announces in its October budget before making any big decisions.

Cash is no longer king

While first-time buyers are piling into the market, there’s been a shift in who’s paying with cold hard cash. Cash buyers, who made up a hefty 43% of the market last year, have dropped to 39%. This means they’ve pulled back around £2 billion from the market.