Confidence in UK housing stuck at lowest levels for five years

Half expect house prices to rise, down from 58 per cent a year ago levels seen since 2013

The survey, which tracks House Price Optimism (HPO) – consumer sentiment on whether average house prices will be higher or lower in a year’s time – has failed to break through the 2013 score despite climbing three points from October 2017 to +33. 

Half of those surveyed expect house prices to rise over the next year, the same as autumn 2017 and remaining at the lowest level since April 2013 (45 per cent). However, fewer people are now negative about the housing market, with 17 per cent  predicting a fall in prices over the next year, down from 20 per cent six months ago, with 26 per cent expecting prices to stay flat.

Base Rate increases not a major concern for mortgage holders

Less than a third of existing mortgage borrowers (29 per cent) are concerned about the possibility of rising interest rates affecting their ability to meet their monthly repayments. This has fallen from 42 per cent in 2014 and, despite the base rate increase in November 2017, compares with 36 per cent expressing concern about affordability six months ago.

On being asked how much monthly mortgage payments would have to increase by before they would struggle to meet them, almost half (47 per cent) said above £150 or that they would face no difficulties. Only five per cent felt that an increase of £24 or less a month would be an issue, with a quarter point increase on the average mortgage (£156,000) equating to around a £17 rise in average monthly payment.

Similarly, interest rates are not considered a major obstacle by those surveyed when it comes to buying a home. Instead, the ability to raise a deposit continues to be the main issue buyers face, followed by concerns around job security and rising property prices. 

Russell Galley, Halifax Managing Director, said: 

“With mortgages the most affordable they have been in a decade, it is perhaps unsurprising that a proportion of people remain unconcerned by the prospects of a base rate rise. This research suggests that for the majority of mortgage holders, there would need to be multiple rate increases before the affordability of their repayments becomes an issue.

“Housing market optimism remains at a five year low and this echoes the subdued house price performance and activity levels we have seen since the end of last year, albeit set against a positive outlook for the majority who believe house prices will increase over the next 12 months. Indeed, it’s encouraging to see fewer people now predicting a fall in house prices compared with six months ago. Overall, we still expect house prices to rise in line with our forecasts for the rest of the year.”