Consumer Confidence in Housing Market falls to record low level, according to Halifax

Consumer confidence in the housing market has plunged to its lowest level in a year, according to a survey from Halifax.

The most recent Halifax Housing Market Confidence Tracker revealed that 68% of those questioned anticipate house prices to increase in the next 12 months, while 6% are holding out hope for selling prices to fall. The net total of 62% projecting house prices to increase rather than fall in value over the next year is the lowest total seen since the summer of 2013, prompting Craig McKinlay, mortgages director at Halifax, to assert that the publicís faith in the increase of affordable housing ìseems to have reached a ceilingî.

This lack of conviction in the affordability of the housing market is rooted deepest in the minds of Londonís inhabitants, who are particularly disillusioned with the exorbitant selling prices of houses within the Capital. The balance of Londoners believing next year will be a good time to purchase property stands at -22%, a figure that paints London as the only region to record a negative figure, with even the increasingly expensive South East yielding a 3% positive outlook. Moreover, the data shows that 8 out of 10 people believe London house prices will exponentially grow in the coming year.

Hurdles in Borrowing

Reasons cited for inability to put down house deposits include rising household bills and stagnant real wage growth. Following a house purchase, a first-time buyer is typically left with 38% of their monthly income after mortgage repayments and expenditure on fundamentals are accounted for.

20% of the sample also expressed their unease about an interest rate hike, and how it would affect their future mortgage repayments if they brought a house in the coming months. This is the same proportion seen in Halifaxís last quarterly tracker, reflecting how little the Coalition has done to address the issue thus far.

This slowdown in borrowing reinforces the widespread perspective that the house price growth could be moderating for a short time, before surging upwards in the near future.

The Office for National Statistics (ONS) said this week that the average UK house price had reached a record high of £274,000 in August ñ 11.7% up on the previous year. However, the monthly growth rate from July to August was a mere 0.6% – buttressing the viewpoint that house price growth is to continue at a more gradual rate.

Tougher lending criteria as a result of enhanced legal powers afforded to the Bank of England is another factor which is thought will contribute to the slowdown in house price growth.

ëIn the last three years consumer confidence in the outlook for the housing market has increased significantly,í said Craig McKinlay.

ëFor 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,í he asserted.

ëHowever, 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 37% of Britons overall,í he added.

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