That’s according to the latest Property Tracker survey from the Building Societies Association (BSA), which found that consumers are equally concerned that a rise in the cost of living (38%) or a rise in interest rates (38%) could hurt the housing market next year.
The BSA said these results suggested that households are sensitive to any increase in costs, whether that is a rise in the cost of borrowing or their general living costs.
Inflation hit a two-year high this week according to the Office for National Statistics, reaching 1.2%. This was driven by an increase in the cost of clothing and fuel. The Bank of England has forecast this rate will reach 2.7% next year.
Andrew Gall, chief economist at the BSA, said: “Inflation is expected to pick up in 2017 whilst wage growth remains weak, so these concerns are not misplaced. However, mortgage rates are currently at all-time lows, enabling many borrowers to benefit from historically low repayments. Fixed rate products also give certainty over repayments for a set time.”
The survey also revealed that the post-Brexit bounce-back in confidence had been very short-lived, with fewer consumers believing now is a good time to buy property against three months ago.
In September, 31% of consumers agreed it was a good time to buy property, with 21% disagreeing. However in the latest survey, the proportion agreeing had fallen to 27%, while 22% disagreed.
Gall added: “There is a great deal of uncertainty around the strength of the UK economy since the vote to leave the European Union, and this is reflected in the Property Tracker results. Potential house-buyers will understandably want to have as clear an idea as possible of the impact on their finances before making significant decisions.”
