Buyers Not Confident in the Housing Market

Confidence in the housing market dropped during April, however, activity is expected to increase in the coming months.

The Halifax Housing Market Confidence Tracker fell to +58 (Halifax rating) in April, down from +64 in March.

This came despite mortgage rates decreasing to record lows and house prices continuing to rise.

Buyers Not Confident in the Housing Market

Furthermore, the amount of people who believe the next year will be a good time to buy a property has increased to +26, up from +21 in March.

Additionally, those who think the next 12 months will be a good time to sell a property fell to +30, from +33 in the previous month. This indicates that the current gap between supply and demand will continue.

Halifax’s research also found a disconnection between people’s property price expectations and the fundamental principles affecting the housing market.

Just 63% of people believe house prices will be higher in 12 months, down from 67% who forecast increases in March.

Halifax said this decline arrives despite many factors supporting the housing market recovery in the short-term. Record low mortgage rates, decreasing swap rates (which affect fixed-rate mortgages), rising employment levels and negative inflation of 0.1% in April all have a positive effect on property.

Meanwhile, the Bank of England’s (BoE) Monetary Policy Committee voted to keep interest rates at 0.5% and its Quarterly Inflation Report signalled that the first base rate increase would not come until 2016.

Mortgages Director at Halifax, Craig McKinlay, comments: “With inflation now at its lowest level since records began, unemployment falling and the economy still growing, the fundamentals for the housing market remain positive.

“Going forward, the key factor in how consumers adjust to any changes in rates will be the way in which they manage their disposable income.”¹

Zoopla found that the average house price in the UK is currently £265,737.

There are signs that property price inflation is starting to pick up again, after a slowdown in the second half of 2014.

Halifax recently reported that house prices rose 1.6% in April, with the annual rate of growth increasing to 8.5%, up from 8.1% in March.

¹ http://www.zoopla.co.uk/discover/property-news/is-the-next-year-a-good-time-to-buy-a-house/#Xl5aO4OHdmlLFcL2.97