Summary
The UK housing market continues its upward trajectory, with prices rising nationwide. Demand remains strong, but the lettings market shows signs of slowing. These market shifts coincide with significant changes to UK building regulations aimed at improving safety and accountability in the construction industry.
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Main Story
UK House Prices on the Rise
The UK housing market is demonstrating continued resilience, with house prices rising across the nation. The Royal Institution of Chartered Surveyors (RICS) November 2024 Residential Market Survey reveals a national house price indicator of +25%, a significant jump from October’s +16%. This marks the fourth consecutive month of price growth, signaling a steady recovery since mid-2024. This positive trend is mirrored by other industry data, with Nationwide reporting a 4.7% year-on-year increase in December 2024 and Halifax recording a 3.3% annual rise for the same period.
This growth is fueled by consistent buyer demand, with new buyer inquiries remaining positive for several months. Although agreed sales volumes plateaued in November, the outlook for future sales remains positive, suggesting continued market activity in the coming months. It’s important to note that while the market is performing well, affordability remains a concern for many potential buyers, particularly with the recent increases in mortgage interest rates. While these rates have risen recently, most experts predict a gradual easing over the medium term. This projected decline in mortgage rates, coupled with continued income growth, is expected to further support the housing market in the coming year.
Regional variations in house price growth are evident. Northern Ireland stands out as the strongest performing area, while East Anglia experiences more modest growth. This disparity highlights the complex dynamics within the UK housing market, influenced by local economic factors and supply and demand imbalances.
Lettings Market Cools Slightly
While the sales market thrives, the lettings market is experiencing a slight slowdown. Tenant demand dipped slightly in November 2024 for the first time since 2020, potentially reflecting seasonal factors. Despite this dip, rental prices are expected to continue rising, driven by a persistent imbalance between supply and demand. Landlord instructions have also decreased, further exacerbating the supply shortage in the rental sector.
Building Regulations Undergo Transformation
Coinciding with these market trends are significant changes to UK building regulations. The Building Safety Act 2022, which came into full force on October 1, 2023, introduces a range of new responsibilities and systems aimed at enhancing safety and accountability within the construction industry.
Key changes include a revised definition of ‘higher-risk’ buildings, encompassing structures at least 18 meters tall or with seven or more stories and containing at least two residential units. These buildings are now subject to stricter safety regulations. The Act also introduces new responsibilities for ‘dutyholders’ involved in the design, construction, and management of buildings, emphasizing accountability throughout the building lifecycle. Furthermore, there are changes to the building control process, including new requirements for information and notifications to be submitted to building control bodies.
These regulatory changes represent a significant shift in the UK construction landscape, placing greater emphasis on safety and accountability. While these changes are essential for improving building safety, they also introduce new complexities for construction professionals. Navigating these new regulations will require careful planning and a thorough understanding of the updated requirements. The long-term impact of these changes on the housing market remains to be seen, but they are likely to influence construction practices and building costs in the years to come.
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