Consumer confidence in UK housing market stable despite economic gloom

Many people believe that it is currently a good time to buy

UK consumer confidence in the housing market remains remarkably stable, if far from booming, despite the gloomy outlook for the economy, according to a new report.

Consumer sentiment is a key indicator of future activity in the property market and provides an early snapshot of potential activity in 2012.

The 14th quarterly Property Tracker survey from the Building Societies Association asked a cross section of 2,069 adults across England, Wales and Scotland for their views and intentions about home purchase in early December.

It found that 44% felt now is a good time to buy a home compared to 25% who did not. This is a slight improvement on March 2011 when 41% were positive about buying in the current market and 29% were negative.

The public in Scotland and the South East and North East regions were the most positive about the market with results above the national total at 49%, 48% and 47% respectively. Consumers in London were amongst the least positive with just 42% believing that now was a good time to buy. This may reflect the higher house prices in the capital.

Overall, 12% of respondents intend to buy next year whereas 63% said that they had no need or desire to move in 2012 and 17% said that they would not be in a position to move.

A further 8% were put off moving for some reason such as the outlook for jobs or the size of deposit required.

Looking across different regions, Londoners had the greatest intention to buy next year, with 21% saying that they intend to purchase property. The regions where intentions are next highest are the West Midlands (16%), the South East, and Yorkshire and the Humber (both 15%). In contrast, those in Wales (5%), the North East (6%), and the North West (7%) have the least intention to buy in 2012.

However, the survey found that challenges remain in realising intentions to buy. The most common barriers cited by respondents were raising a deposit to buy a property (64%), obtaining a large enough mortgage (57%), and fears over job security (54%). Far fewer see the potential for future house price falls as a barrier at 21%.

Views were mixed over what will happen to house prices in 2012. Overall 33% expect prices to rise compared to 28% who believe that they will fall and 20% who see them staying the same.

Regionally, consumers in the West Midlands and Scotland have the highest expectations with 38% and 40% respectively believing they will rise. At the other end of the spectrum, only 23% of the respondents in the North East expect prices to rise compared to 31% who expect them to fall.

‘Although there has been a stream of gloomy economic news recently, and the uncertainty about the Eurozone has increased dramatically, consumers’ views on the housing market remain remarkably solid. Many people believe that it is currently a good time to buy, and about one in eight will be looking to enter the market or move in 2012, especially in London where 21% intend to buy,’ said BSA head of mortgage policy, Paul Broadhead.

‘Government policy announcements such as the new build indemnity scheme indicate how important the housing market is to the UK economy, so the fact that confidence is not weakening is reassuring. More is in the pipeline to help break down the barriers to home ownership, although this must always be tempered with a responsible approach to lending as home ownership is not always the most appropriate choice for everyone,’ he explained.

‘So far this year building societies and other mutual lenders have supported those who have wanted to buy property, with gross lending by mutuals up 15% year on year, while across the rest of the market mortgage lending is slightly down,’ he added.

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