The latest survey revealed that consumers expect the value of their home to increase by 1% over the next six months. While 35% of consumers believe now to be a good time to make a major purchase, the percentage of consumers who believe it is a bad time increased by four percentage points to 38% in December. This may reflect concerns over the end of the Stamp Duty holiday and the VAT rate increase in January 2010.
Overall, the Consumer Confidence Index recorded a five point decrease in December to 69, its biggest fall since November 2008. This comes at the end of a positive year for the index, which gained some upwards momentum in 2009 to help claw its way up from the record low seen in January.
While the Present Situation Index remained unchanged on 20 points, the Expectations Index decreased eight points to 101 in December. The Spending Index recorded a one point fall during the month and has remained broadly stable now since September.
Martin Gahbauer, chief economist at Nationwide, said the fall in confidence in December suggested that an element of caution may have begun to creep back into the minds of consumers over the Christmas period.
He said: “The main driver behind this revival is likely to have been a renewed hope for the future economic situation and a belief that the worst of the recession is over. However, the looming VAT hike and other tax changes announced in the Pre-Budget Report may have impacted on confidence in December, forcing people to review their expectations for the future. Although it is still early days, these lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
