Despite confidence having fallen in February - a reaction to January’s rate rise, the two month reprieve has been enough for sentiment to recover slightly. Currently 81.9% of people expect house prices to rise over the next year, by an average of 6.4%. This is compared to the 77.8% who expected house prices to rise in February, by an average of 5.9% over twelve months.
Warren Bright, Chief Executive of Propertyfinder.com commented: “We have seen a slow down in the housing market in recent months. The latest Inland Revenue data shows that house purchase transactions have dwindled recently, whilst some house price indices have reported a slow down in house price growth.”
“However, people have faith in the value of bricks and mortar, and as long as the UK housing market continues to experience such drastic supply issues, this is unlikely to change significantly. Confidence in the housing market is fairly buoyant; what we are seeing now is a controlled slowing and a well needed adjustment of balance between buyers and sellers
Gulf closes between buyers and sellers
Last month seller confidence far outweighed that of buyers, with 10% more sellers expecting house prices to rise by 2% more in value than buyers. However, this month we see a tightening in the opinion gap, with an almost equal proportion of buyers and sellers expecting house prices to rise over the next year.
Warren Bright continued: “The fact that market confidence is shared by buyers and sellers is good news. Last month’s figures indicated that the imbalance of power in the market had made sellers overconfident - and in the past this has pre-empted a significant decline in property transaction volumes. Since recent data shows transactions are already down, a further decrease could have been too much. This month the sentiment gap has closed. The balance is redressed and any further cooling of the market should take place in a maintainable way.”
Interest rates still a cause for concern
Despite the rise in confidence on last month, interest rates remain a concern for many prospective homebuyers, with 62.5% of people holding any fall in house prices over the next twelve months accountable to further rate rises. 54.2% of people also stated that mortgages are unaffordable.
A further 0.25% rise would mean someone buying a home would pay over £150 more in monthly mortgage payments than a year ago - a 25% increase.
Warren Bright concluded: “Whilst confidence has recovered this month, interest rates and affordability issues are still at the forefront of people’s minds. This week’s budget could already impact upon people’s financial ability and willingness to move home - hikes in stamp duty, for one, are very likely. We think the Bank of England has done enough to ensure that the market cools sensibly – a further rise next month may prove a step too far. Hands off our houses now Mr. King!”
