Confidence in UK housing market slips to lowest level in five years

Half expect prices to rise as confidence in the economy cools

Confidence in UK house prices has fallen to its lowest level since December 2012, according to the latest Halifax Housing Market Confidence Tracker. 

The survey, which tracks House Price Optimism (HPO) – consumer sentiment on whether house prices will be higher or lower in a year’s time – has dropped 14 points from April 2017 (+44) to October (+30), matching the record fall seen following the EU referendum result. 

The index has also fallen by 38 points since the peak of +68 in May 2015 around the time of the General Election. 

Half (50 per cent) of those surveyed now expect house prices to rise over the next year, the lowest level since April 2013 (45 per cent), whilst one in five think house prices will fall, the highest point since October 2012 (20 per cent).  

Despite expectations of a Base Rate rise, an increase is not perceived as the main barrier for people in general to buy a house (15 per cent). Instead, the ability to raise a deposit (61 per cent) and job security (42 per cent) remain the main barriers, with household finances recording the biggest increase (+7) since the last survey.

When asking existing mortgage borrowers about their concern in rising interest rates affecting their ability to meet their repayments, only a third (36 per cent) show concern. This has decreased by six percentage points, down from 42 per cent in 2014.

Russell Galley, Managing Director, Halifax Community Bank, said: “Housing market optimism has declined significantly over the past year, with almost half of people expecting a general slowdown in the market. 

“Even with a potential base rate increase on the horizon, it’s significant that buyers’ concerns continue to be centred on raising deposits and job security and, as such, we do not anticipate that an increase in Base Rate will have a significant effect on the demand for properties.”