Valuable information for borrowers will come next week. On 20 March, the inflation report will be released, and the next day will be the Bank of England’s Monetary Policy Committee (MPC) meeting in which they will be responding to the newly released inflation rate. Inflation had dropped to 3.9% at the end of last year only to rise to 4.0% where it has sat stubbornly for a few months. Of course, the expectation is for a shift in the inflation level toward the target set by the Bank of 2.0%, but if it remains steady or rises, the MPC might take an assertive stance.

In an effort to help first time home buyers, there had been a rumored home buyer scheme that would be announced near the release of the spring budget. The details were well discussed and there were those voicing for and against the scheme. The expectation was for an opportunity to assist home buyers with a lower deposit of only 1.0%. This was offered as a solution due to the difficulty of saving for a deposit, which has been reported as taking an average of ten years to do so. However, there were those that believed it would put homeowners at a greater risk of falling into negative equity especially if property values declined from the current higher prices.

In an act of resilience against the forecasts for the first half of the year, the housing market has recorded an average house price near the peak recorded in 2022. Expectations for the first half of 2024 were for consumers to still feel the impact of inflation as it slowly creeped toward the target level of 2.0%. In addition, borrowing would remain expensive as the Bank of England’s Monetary Policy Committee (MPC) put pressure on inflation to remain on a downward trajectory toward target. The ability to buy a home was considered to be more difficult to accomplish until inflation eased borrowing costs later in 2024. This would cause a stall in growth in the housing market, as well as lower asking prices and buyers would return in the last part of the year and possibly not until 2025.

In the latest report from Nationwide, the February data revealed the first annual house price increase in more than one year. There was a 1.2% increase in the average house price for February 2024 over February last year. This comes after a decline of 0.2% in January. It is a stronger housing market report than forecasted by several experts including the economists poll completed by Reuters with an expectation of a 0.3% month on month increase and a 0.7% annual increase.

The UK housing market is being forecasted to make a strong stance throughout the year. This comes only months after it was expected the housing market would falter as hopeful home buyers struggled to climb onto the property ladder. The lack of demand was hoped to bring down asking prices and home buyers would eventually return, but not likely would there be a strong rebound until 2025. At the same time, it was expected inflation would no longer be a problem and borrowing would cease to be as expensive next year as it is now.

First-time home buyers are having to look for help to grasp their dream of homeownership. A recent report stated the average length of time to save for a deposit is ten years. Inflation has made it even harder to save money for a deposit. In addition, borrowing is expensive and house prices are high, especially for first-time home buyers. It is not easy to buy a home today and it only looks to get more difficult.