Confidence in UK house prices has fallen to its lowest level since December 2012 with just half of consumers expecting values to rise over the next year. The house price optimism survey from lender the Halifax has dropped 14 points from April to October, matching the record fall seen following the European Union referendum result. The index has also fallen by 38 points since the peak of 68 in May 2015 around the time of the general election in that year to a point where 20% think house prices will fall.
Despite expectations of an interest rate rise as early as next week, an increase is not perceived as the main barrier for people in general to buy a house with only 15% saying so. The main barriers is saving for a deposit with 61% saying this is preventing them a buying a home, followed by 42% naming concerns about job security. Among existing mortgage borrowers just 26% say they are concerned about a rise in interest rates affecting their ability to meet their repayments, down from 42% in 2014.
‘Housing market optimism has declined significantly over the past year, with almost half of people expecting a general slowdown in the market,’ said Russell Galley, managing director of the Halifax Community Bank.
‘Even with a potential base rate increase on the horizon, it’s significant that buyers’ concerns continue to be centred on raising deposits and job security and, as such, we do not anticipate that an increase in base rate will have a significant effect on the demand for properties,’ he explained.
The report suggests that the drop off in confidence has coincided with growing concerns around the health of Britain’s wider economy. The Economic Optimism Index, a separate survey by Ipsos MORI, continues to deteriorate, with the balance of people who believe that Britain’s general economic conditions will improve over the next 12 months down at -31, its lowest level since January 2012.
When it comes to the balance of people who think the next 12 months would be a good time to buy, London is the only region with a negative outlook at -3%, whilst people from the West Midlands at +30 and Wales at +26 are the most positive.
Those aged between 16 and 24 are the only age group with a negative buying outlook at -15%, whilst those over 65 are the most positive at +26. Across the country over half, some 52%, of those surveyed think that it would be a good time to buy.
Overall, selling sentiment at 6% has become more negative, down 11 points since April 2017, with those in Wales the least positive about selling at -19%, followed by those in London at -17. The South West are most positive about selling at 42%. The survey also found that people aged 16 to 24 are least positive about selling at -8% with 35 to 54 year olds the most positive at +20%.
