The UK housing market has returned to growth, according to the latest research from Savills.

Spending on house purchases edged back above £350bn in the year to the end of June – meaning that the size of the UK housing market is now slightly larger than its pre-pandemic average.

A return to growth was fuelled by £88.3bn spent in the second quarter of the year (2024), which represented a +£6.6bn (8%) increase on the same three months last year (Q2 2023).

The jump in spending was fuelled by a 22% increase in the amount of mortgage debt forward by lenders, as stability returned to the mortgage markets.

Total spending by first-time buyers exceeded £21bn in the quarter; a £4.1bn increase on the year (Q2 2023). Overall, first-time buyer activity accounted for 24% of all spending in the market, the highest proportion in eight years.

Meanwhile spending by cash buyers, which accounted for 43% of all spending in the housing market in 2023, fell by around £2bn to 39% of total spend in Q2 2024.

Table 1: Size of the UK Housing Market Q2 2024 v Q2 2023

Source:  Savills using data from HMRC, ONS, BoE and HMLR

Lucian Cook, head of residential research at Savills, said: “As interest rates continue to ease, we can expect to see the size of the housing market expand further over the next 12 months. Lower mortgage costs will encourage a wider range of buyers back to the housing market.

“In particular, we should see an increase in upsizers who put plans to trade up the housing market on hold in the face of higher mortgage costs. This cohort is likely to be at the forefront of that growth, although some may wait until after the government’s October budget before taking the leap.”