Propertyfinder.com’s May survey revealed a marked turnaround in confidence among househunters concerning the market’s prospects. 54 per cent now expect prices to rise over the next 12 months while just 34 per cent expect a fall.
After April’s knock to industry confidence, when prices fell 7.7 per cent, experts now predict a slip of just 0.3 per cent over the next year. Fears over increasing interest rates have also been dispelled.
The narrowing expectations between buyers and sellers is also further evidence of a ‘soft landing’. Since September 2004, buyers have been more pessimistic than sellers and the widening gulf caused stalemate in the market. The gap has now begun to shrink, prompting the belief that market activity will become healthier.
Jim Buckle, managing director of Propertyfinder.com, said: “We don’t see a return to boom, and confidence is likely to fluctuate in the coming months, but a crash is clearly off the cards.”
Martin Upton, a lecturer in finance at the Open University’s Business School, believes economic conditions which produce weaker prices are absent.
He said: “Falling house prices in the UK have been associated with high unemployment and interest rates but currently unemployment is low and unlikely to rise markedly in the coming months and at 4.75 per cent the Base Rate remains low.
“With interest rates set to fall in the wake of a general slowdown in economic activity it is feasible that house price inflation will rise again in 2006.”
Richard Sexton, national business development manager of e.surv, said it endorsed the findings. “It will be a stable year with few areas of negative growth in the next few months. But it won’t be overly exciting either except in isolated hotspots such as Northern Ireland and Cardiff.”
