This is according to the Rightmove Consumer Confidence Survey which shows the proportion of ‘price pessimist’ consumers expecting house prices to drop in the next 12 months fell back from 1 in 3 to 1 in 4 this quarter.
However, over-valuation is now emerging as a major issue as around half of the UK believes prices in their local area to be too high. Just under half (48%) of respondents believe prices in their local area are over-valued, with just 15% of the opinion that they are too low. In London (60.8), the South East (51.7%) and the South West (52.7%) the proportion of those feeling prices were overvalued were in the majority.
It is the seventh consecutive quarterly increase in those expecting prices to stay the same, now up to 40%, which indicates a period of house price stagnation, according to Rightmove. However economic recovery and the return of mortgage finance is seen as critical to housing recovery.
Rightmove director Miles Shipside commented: “Our Q1 survey measured the highest proportion of home movers recorded to date forecasting that prices would be lower in 12 months’ time. That was the position of a third of them then, but now that proportion sharing that view has dropped to a quarter.”
Shipside added: “There is a growing sense that many homes coming onto the UK housing market are priced too high and this is borne out by the views expressed in this survey. We now have a situation where half of the UK public feel house prices are too high, yet three quarters of the same public are expecting prices to either stay the same or increase over the next 12 months. This suggests the prospect of a market stand-off and rising unsold stock levels if sellers don’t wise up to the house price views of their target market.”
However, he said: “The biggest proportion in our survey, 4 out of 10, think we are through the worst and expect a period of price stagnation, rather than rises and falls 12 months out. It’s not exciting for those owner occupiers hoping for their bricks and mortar investment to grow, but a sign of a sense of realism that the roof over your head is a home rather than a wealth play.”
Reasons for the more optimistic move in the main seem to be a feeling that the economy would be improving (54%), though those in the price pessimism camp felt that deteriorating mortgage availability was becoming a bigger issue, jumping from 12% last survey to 23% this.
