House price confidence remains strong

The latest quarterly Halifax Housing Market Confidence Tracker has revealed that confidence in the UK housing market remains strong despite a backdrop of cooling confidence in the wider economy.

Despite declining steadily since last May, house price optimism (HPO1) in the final quarter of 2015  continued to show that a majority of people believe that average UK property prices will be higher rather than lower 12 months from now (+61 compared to +68 in May 2015), with 13% believing it will be at least 10% higher.

By contrast, the number of people who believe that Britain’s general economic conditions will improve over the next 12 months (EOI2) has dropped more sharply during the same period (-1, compared to +26  in May 2015).

Craig McKinlay, Mortgages Director at Halifax, said: “Solid economic growth, rising real earnings and falls in already very low mortgage rates are all stimulating housing. At the same time, there is an increasingly acute imbalance between supply and demand, which is causing property prices to rise at a robust pace.

This situation, which is unlikely to reverse significantly in the short-term, is reflected in the public’s continuing high levels of optimism regarding house price growth over the coming 12 months.”

Good time to buy or sell

There has been a small rise in positive selling sentiment since last quarter, with 55% (+3) of people thinking the next 12 months will be a good time to sell. By contrast, there has been a drop in the proportion who expect it to be a bad time to sell, down 3 points in the same period, to 29% now.

Positive buying sentiment has increased marginally, at 54% (+1), with negativity down 2 points to 31%.

The proportion who think it would be a good time to buy and to sell property has risen to 39%, up 3 points on the previous quarter, while 15% of people think the next 12 months would be a bad time to do both.

Deposits are still seen as the main barrier to buying a home

The proportion identifying rising property prices as a barrier to buying a property has risen to 37%, up 6 points on the previous quarter and the highest this figure has been since the survey’s inception, with average UK house prices now standing at £208,2863 following a 10% increase during 2015.

However, raising a deposit is still believed to be the main barrier to buying property, with 58% of people choosing this as a reason (up 1 point from last quarter). Job security is the number two reason, at 42% (no change).

Concerns about interest rate rises as a barrier have fallen, with only 11% of respondents mentioning this, down 5 points from last quarter.

Craig McKinlay, Mortgages Director at Halifax, said: “Difficulties in raising a deposit, concerns about job security and high property prices remain the main barriers to people buying a home. The proportion identifying rising prices has risen to the highest in the survey’s history. The decline in affordability that this highlights is expected to dampen housing demand and property price growth over the medium term.”

Mortgage interest rate rise expectations decline

Half think mortgage interest rates will be higher in 12 months’ time (a drop from 58% in Sept). Expectations of a rise in savings interest have also fallen, to 28% (having been 35% in Sept).