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Consumer sentiment cools on outlook for UK house prices

15th October 2014 Print

After staying high and steady for the last year consumer confidence in the housing market has fallen to its lowest level in 12 months, according to the latest quarterly Halifax Housing Market Confidence Tracker.

This dip mirrors the small fall in confidence over the outlook for the economy in the coming year. However the overall picture for house prices remains relatively robust as the difference between those who think it is a good time to buy and those who think it is a good time to sell has converged, which points to a period of fairly stable house prices.

Craig McKinlay, Mortgages Director at Halifax, said: “In the last three years consumer confidence in the outlook for the housing market has increased significantly. For the last year however, it seems to have reached a ceiling and, with speculation as the strength of the economy increasing in the last few months, confidence has fallen to its lowest level in 12 months.

“However, the national figures mask big regional differences, and more than half of people in London (55%) think the next 12 months will be a bad time to buy compared to compared to just over a third (37%) of Britons overall.”

Regional confidence

Regionally, those in London have the most positive outlook for the average UK property price, with eight in ten (79%) expecting a rise in compared to seven in ten (68%) overall.

This is no doubt a contributing factor for London also being the only region where a greater proportion think it’ll be a bad time to buy, than those who think it’ll be a good time to buy (55% and 33% respectively), and this is the second consecutive quarter there has been a net negative figure for Londoners’ buying sentiment.

Barriers to buying

The most frequently mentioned perceived barrier to buying is being able to raise enough deposit, with 57% saying this is an issue. However, this has fallen from the 63% who said this one year ago, in Q3 2014. In the last three months, the proportion citing household finances as a barrier has risen eleven percentage points from 28% to 39%.

Meanwhile, one in five (19%) mention concerns about interest rate rises as a barrier to buying; this is in line with Q2 2014 (where this figure was 18%), but higher than this time last year (where this figure stood at 11%).

House price expectations

Since the last quarter there has been a significant decrease in the proportion expecting the average UK property price to rise over the next 12 months, from 71% in Q2 2014 to 68% in Q3. While the proportions expecting a small rise (up to 10% higher) have remained stable, the proportion expecting an increase of 10% or more but less than 15% has fallen (from 11% in Q2 2014, to 9%).