British people less optimistic about the UK housing market

Confidence in the housing market has weakened, research shows

More British people expect house prices to rise than fall over the coming twelve months, according to the latest quarterly Halifax Housing Market Confidence tracker, but confidence has weakened.

Some 34% forecast that the average UK house price will rise over the next year, whilst 19% predict a decline in prices over the same period.

Nonetheless, the headline House Price Outlook balance, that is the difference between the proportion of people that expect house prices to rise rather than fall, eased from 19% in March to 15% in June.

Despite this slight weakening, confidence in house price prospects remains higher than at the beginning of the year with the House Price Outlook balance in June more than double the +7 in January.

‘Confidence in the housing market has weakened a little over the last three months, reflecting the increased uncertainty regarding the economic outlook. The public’s confidence in the housing market, however, has been very resilient so far this year. This is, consistent with the broad house price stability experienced over the first half of 2012,’ said Martin Ellis, housing economist at the Halifax.

‘Overall, we expect little change in prices and sales over the remainder of the year provided that the UK’s economic outlook does not deteriorate significantly,’ he added.

Those living in London and Wales are the most with an overall net balance of +25 in both in June. These areas are followed by the South East at +22 and the East of England at +21. In contrast, those in the East Midlands have the least positive outlook for house prices at +2, followed by the North East at +4.

Eight of the eleven tracked regions saw a weakening in their headline House Price Outlook balance between March and June. The South West recorded the biggest fall at -17, followed by the East Midlands at -15. Wales at +13 and the West Midlands at +8 were the only regions to see a positive increase in sentiment in their headline House Price Outlook balance.

Concerns over job security and raising a deposit are the main concerns. Some 58% named high deposits and 56% names job security as the main barriers to buying a home. Respondents also picked out household finances and the general availability of mortgages, both 31%, as major hurdles to home buying.

The survey also found that men are more optimistic than women about house price prospects. Some 38% of men predict that house prices nationally will increase in the next 12 months compared with 32% of women.

Younger people are the most optimistic with 16 to 24 year olds and 25 to 34 year olds the most optimistic regarding house prices with an overall net balance of +26 among each age group in June. In contrast, 45 to 54 year olds have the least positive outlook for house prices at +5.

Public opinion continues to point to a buyers’ market. Over half of respondents, 54%, think that it will be a good time to buy in the next 12 months. This is more than three and a half times the proportion of Britons that feel it will be a good time to sell.

Overall, just over one in 10 of those questioned, 12%, were positive about both buying and selling over the next year, suggesting that the level of housing market activity is likely to remain subdued.

There has been a decline in the proportion of Britons expecting rents to rise in 2012. Some 61% of respondents forecast that the cost of private sector renting will increase over the next year. Whilst this is down from 71% of respondents in March’s survey, the proportion of Britons that think rental costs will increase over the next 12 months remains substantially higher than the proportion who thinks that rents will fall, at 61% against 4%.

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