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Housing market confidence ‘low but stable’

by: Heather Greig-Smith
  • 21/04/2017
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Housing market confidence ‘low but stable’
Confidence in the UK housing market has stabilised following a record decline, according to the latest Halifax Housing Market Confidence Tracker.

The survey, which tracks consumer sentiment on whether house prices will be higher or lower in a year’s time – has shown a small improvement (+2 points) from a net +42 in October 2016 to +44.

This improvement follows a record fall in October 2016 after the EU referendum result.

Nearly six in 10 respondents (58%) expected the average property price to rise in the next 12 months, compared to just one in 10 (14%) who expected prices to fall. However, this compared to a record high of 72% who were anticipating price rises in May 2015.

Among those who expect the average price to rise, there has been a shift towards expecting more modest rises; those expecting rises of up to 5% have increased from 26% to 30% since October. Over a quarter (28%) expect prices to be higher by 5% or more.

UK average house prices over the last year rose by 3.8% to £219,949, according to Halifax.


Lower norm

Martin Ellis (pictured), Halifax housing economist, said: “House price optimism is little changed since the October 2016 measure, which is significant because it was the first post-Brexit survey and recorded the steepest fall since the tracker began. The latest results suggest that consumer confidence in the housing market is potentially settling into a new lower normal.

“This sentiment echoes the slowdown in the annual rate of house price growth, which has more than halved over the past 12 months.”

Ellis added that there was a renewed drop in confidence among consumers regarding the general economic outlook, coinciding with negotiations on Brexit.

“The gap between house price optimism and economic optimism has only been bigger once – March 2016 – indicating that while there is greater consumer uncertainty over the wider economy, confidence with the housing market is holding up well, possibly due to other factors such as a shortage of available housing,” he said.

The balance of people who think the next 12 months would be a good time to sell has moved from +9 to +17. Now, half (52%) of the public think the next 12 months will be a good time to sell (up by 5% from October 2016) compared to a third (35%) who expect it to be a bad time to sell (down by 3%).

However, buying sentiment has dipped further from +17 to +14 – the lowest it has been since September 2014. There is a North-South divide when it comes to buying – with sentiment lowest in London and southern England.


Deposit barrier

Being able to raise enough deposit remains the biggest perceived barrier to people buying a home, with 65% choosing this as a reason from a list (up by three points from October 2016).

Research from MoneySuperMarket this week revealed that prospective homeowners in some areas of the UK would need to save for 27 years before they could afford to buy in the area they currently live. The situation is particularly bad in London.

In total, there are 34 local authorities in which it would take prospective homeowners 10 years to afford the minimum deposit needed to buy in their borough

According to Halifax, job security remained the number two barrier, at 41% (down by seven points). The proportion of those considering household finances to be a barrier saw the highest increase, up eight points to 30%.

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