Research for Nationwide Building Society conducted before and after the Governor of the Bank of England’s speech to the CBI in Glasgow on 14 June shows a shift in homeowners’ perceptions of the likely value of their property in six months’ time. Fewer people now think their homes will have increased in value by the year end and more think the value of their homes will fall.
Turning to the wider economy people’s views are evenly divided on the UK’s economic outlook. However, only one in three people think now is a good time to make a major purchase such as a house or car.
The majority think housing market conditions are challenging, reflecting both affordability issues for first time buyers and pressures facing existing homeowners wishing to trade up. Perhaps unsurprisingly, people in private rented accommodation have the most negative view of the housing market.
Commenting on the figures Stuart Bernau, Nationwide's executive director said:
"Although more people are pessimistic about the future value of their homes, over half still expect them to be worth more by the end of the year. The short term economy continues to look robust with the jobs market remaining strong and interest rates continuing to be at historically low levels despite recent rises in the base rate. People feel more cautious about the state of the economy in six months time however, and this may lead to them revising future purchasing decisions."
Confidence highlights
* Over half (52%) regard the UK economic situation as good and only 17% see it as bad at the moment. Looking forward six months over half 53% see no change in the situation, but a quarter (28%) see the economy worsening by the year end.
* 44% think the economy is moving in the right direction and 43% think it is moving in the wrong direction.
* 31% of people in the UK believe now is a good time to make a major purchase such as a house or car. Those in private rented accommodation are the least likely to feel confident that it is a good time to make major purchases.
* 56% believe now is a good time to buy household goods such as appliances.
* A minority (29%) believe housing market conditions are now good.
Mervyn King’s impact on housing confidence
* Over half (52%) of homeowners expect their homes to be worth more by the end of the year, whereas before Mr King’s speech over two thirds (66%) believed their homes would increase in value.
* The number who believe their homes will lose value by the year end is still only 10%, compared with 5% before Mr King warned prices could fall.
* Homeowners with a mortgage are more likely to be optimistic than those who have no mortgage. 56% with a mortgage expect the value of their property to rise in the next six months, compared with only 47% of those without a mortgage.
Nationwide’s consumer confidence report is based on a survey of 1,276 people, between 13 May and 14 June 2004, representative of the UK population. The survey was conducted in partnership with TNS plc. (NFO, now part of TNS, has worked with The Conference Board in the US since the inception of its consumer confidence index in 1967.) A further survey of 1008 people was undertaken between 25 and 27 June 2004, after Mervyn King’s warning that house prices could fall.
