As we close the door on 2024 – it’s important to take a step back and reassess the events of the past 12 months.
When it comes to property – though somewhat smoother than preceding years, 2024 has remained challenging. Not only have households had to navigate record-high house prices, following the recovery of the housing market post-Covid, but also the cost-of-living crisis has, by and large, considerably reduced people’s disposable income, pushing home ownership for those not already on the ladder even further out of reach. Whilst Truss’ disastrous mini budget hiked the costs of owners remaining in their own home as they rolled off fixed rate agreements.
The house price to earnings ratio is now estimated at 7.9 in 2024 and is forecasted to be 7.7 in both 2025 and 2026. And, although this represents a considerable drop from the 2022 ratio of 8.8, it still means that the average house is nearly eight times that of the average UK salary, not to mention the feat facing first time buyers of raising a deposit in the first place.
People’s changing work and lifestyle patterns have made today’s population, and their property needs, more diverse than in the past.
As we look towards 2025 and beyond, what we know for certain is that the specialist lending sector will continue to grow as demand grows for increased support for mortgage borrowers who require flexible finance options, given the high proportion of those that will continue to find themselves outside of what constitutes a standard high street applicant.
And yet, even after the challenging and turbulent last 12 months, we at Together are still seeing new opportunities for both owner occupiers and investors opening up for those looking to acquire residential or commercial property next year and beyond. Aspiration is still high, and the number of residential transactions is expected to increase by 15% over the next five years.
Be it upsizing, downsizing, or just general rightsizing, we’ve found that almost one in five homeowners are looking to move next year, despite uncertainty on interest rate rises. This trend is particularly prominent in the younger generation, as 26% of those looking to move home in the next 12 months are actually aged 18-24. The ‘return to office’ trend, better transport links, amenities and career opportunities, as well as the availability of smaller, less expensive properties; we expect this demographic to continue to seek options for urban living in the next 24 months.
Looking across the whole of the specialist market, our forecast for specialist lending sees the total, for segments on which we have data, increasing from £32 billion to £54 billion over 2023-29 - a 70% increase.
This is where our specialist proposition with the ability to assess mortgage applications on a case-by-case basis really comes into play; as numbers of applicants that do not fall into a tick box automated criteria increase.
Together is focussed on supporting the property professionals we work with to create the most value, be that in the residential, retail or commercial space – offering speed, flexibility, and relationship-driven lending as central to our offering. This really makes us stand out in the space, as mainstream lenders may be less able to consider lending to certain commercial and residential sectors.
With this in mind, we remain committed to ensuring we are able to both support our long-standing and new customers throughout the current cost of living crisis as well as via an expanding product set to help seize opportunities and achieve property ambitions.
2024 marks the 50th anniversary of Together, where we have built a strong presence in the market with a loan booked which has surpassed £7bn. But that does not mean that we are resting on our laurels, there are also some exciting projects underway to prepare the business for the next 50 years, including a renewed focus on our business development and broker network channels ..
We believe that there are still many who falsely believe that they cannot achieve their housing ambitions because they do not fit the criteria of high street lenders and as a result, we, as part of the specialist lending sector, have a big part to play.
What remains to be done is to build a higher profile and awareness for specialist lending to help reach these potential customers, allowing more of them to enjoy the wide range of benefits that homeownership brings.
