Spending on Rent and Mortgages Sees 6.3% Uptick

The latest data from Barclays reveals a 6.3% year-on-year increase in spending on rent and mortgages in May, surpassing the 3.6% growth seen in April. While this may seem like a cause for concern, there are signs of optimism emerging amidst falling inflation and energy prices.

UK Housing Market Confidence Rises

According to the data, six in 10 individuals (62%) reported feeling more able to live within their means due to the slowdown in inflation, while a similar proportion (56%) expressed increased confidence in their household finances. This growing confidence is reflected in the slight uptick in confidence in the UK housing market, which rose from 25% to 27% last month.

Despite the increased housing costs compared to 2023 figures, the month-on-month difference was marginal at -0.01%. This suggests that consumers may not be feeling worse off in the short term, particularly in light of the decrease in the Ofgem energy price cap in April, which led to a 12.5% drop in consumer spending on utilities in May.

Home Improvement Spending Sees Recovery

In other news, spending on home improvement showed signs of recovery last month, with furniture stores experiencing their smallest decrease (-2%) since last August, and home improvement and DIY stores seeing their best performance (-5.4%) since last September. This is likely due to homeowners taking advantage of the early May bank holiday to spruce up their living spaces.

Renting vs Buying: The Debate Continues

The debate between renting and buying continues, with one in 10 of those trying to get on the property ladder citing societal pressure to be a homeowner. However, three in 10 (30%) cite the cost of a deposit as the biggest barrier to buying a home, while 18% say they are delaying entering the property market due to high interest rates.

On the other hand, one in seven renters (15%) prefer the flexibility that renting provides, while 12% say they prefer renting due to low confidence in the UK housing market.

The Role of the ‘Bank of Mum and Dad’

The ‘bank of mum and dad’ continues to play a significant role in helping younger generations get on the property ladder, with 19% of 18-34-year-olds receiving financial support from their parents, compared to 10% of over 55s.

For those who have purchased property, 30% did so because it was cheaper than renting in the long term, while 24% said they got on the property ladder because it was a good investment.

As the retail sector continues to struggle, the signs of optimism in the housing market are a welcome respite. With falling inflation and energy prices, and increased spending on home improvement, there is hope that the sector will continue to recover in the coming months.