Confidence in the UK housing market has dropped to a six-month low, with only 24% of buyers feeling positive amid rising property prices and looming stamp duty changes, according to the latest Barclays Property Insights report.

The report highlights increasing concerns among renters, with more than half (51%) citing property prices as the biggest barrier to home ownership—an 11% rise since December. The cost of a deposit is also a growing concern, with 44% identifying it as a major obstacle, up from 37% at the end of last year.

Despite these challenges, optimism remains. Nearly a quarter (23%) of renters believe they can achieve home ownership within the next five years, and three in ten (31%) are currently saving for a deposit.

Rising Costs but Stable Confidence

Housing costs continued their upward trend, with mortgage and rent payments increasing by 2% year-on-year in January. However, consumer confidence in their ability to afford these expenses remained steady at 52% month-on-month.

The report also shows a slight decline in concerns over interest rate hikes, with 61% of consumers worried about rising rates, down from 62% in December. This shift follows the Bank of England’s decision to cut the base rate, currently standing at 4.5% after peaking at 5.25%.

Growing Support for New Builds

As confidence in the housing market declines, many see housebuilding as a key solution. Nearly two-thirds (65%) believe new builds are essential to addressing the UK’s housing shortage, while 42% say new developments bring economic benefits to local communities.

Interest in new-build properties remains strong, particularly among younger buyers. While 42% of UK adults would consider purchasing a new home, this figure rises to 52% among 18–34-year-olds. Younger buyers are also three times more likely than older generations to see new builds as better value for money (34% vs 11%). Regionally, residents in Northern Ireland (55%), London (51%), and the West Midlands (46%) are the most open to purchasing a newly built home.

Among current homeowners, 28% have previously purchased a new-build property, with the main attractions being a fresh start (51%), desired location (51%), absence of a property chain (38%), and modern features (35%). Energy efficiency is another factor, with 24% believing new builds are more eco-friendly and 20% viewing them as more affordable than older homes.

Energy Efficiency and Mortgage Trends

Barclays data indicates a 10.1% drop in customer spending on utilities in January, despite Ofgem’s energy price cap increase. Both renters and homeowners are prioritising energy efficiency as a way to cut costs. Nearly three in ten homeowners (28%) are upgrading their properties for better energy performance, while 21% of renters are considering moving to a more efficient home to reduce their bills.

For mortgage holders, the impact of recent base rate changes has been mixed. While 72% of mortgage holders are on fixed-rate deals, meaning their payments remain unchanged until their term expires, those who remortgaged in the past year have faced significant cost increases. Of the 14% who refinanced, nearly 60% saw their monthly repayments rise by an average of £242.70, or £2,912.40 annually, due to higher mortgage rates compared to pre-2022 levels. However, 10% reported lower monthly costs after remortgaging, benefiting from short-term deals secured during the higher-rate environment.

Market Outlook

Sian McIntyre, managing director of Mortgages and Savings at Barclays, remains cautiously optimistic:

“The start of 2025 saw a slight increase in mortgage and rental spend, though encouragingly this hasn’t knocked consumers’ confidence in their ability to make payments. This month’s reduction in the base rate was a further signal that we’re headed in the right direction.

“Housebuilding is increasingly a focus, with the nation’s outlook on new developments pragmatic, recognising the necessity for new builds as part of the solution to increase housing supply, as well as the advantages they can bring to both homeowners and communities. Ahead of April’s looming stamp duty changes, prospective buyers will continue to look for ways to pair aspiration and affordability, with energy efficiency a clear priority when choosing the right home.”

With housing affordability under pressure and market uncertainty persisting, many prospective buyers will be watching closely for further economic shifts in the months ahead.