Consumer confidence in house purchase deteriorates
Short-term uncertainty from the General Election result has caused a deterioration of consumer confidence in the housing market, according to a report from the Building Societies Association out today.
Statistics from consumer survey Property Tracker published by the BSA, show just 21% of consumers saying that now is a good time to buy, down from 29% in March this year. Nearly a third of consumers (30%) disagree that now is a good time to buy a home, the highest figure since December 2008 (37%) and up from 24% in March.
Unsurprisingly, it is young people (18-24), that are the least confident about buying now with only 16% believing that now is a good time to buy. A larger proportion (44%) of this age group believe that house prices will continue to rise over the next 12 months, compared to 37% across all ages. This makes it harder for them to raise a deposit and afford a home of their own.
Across all age groups, raising a deposit continues to be perceived as the single biggest barrier to home ownership, with 67% of consumers saying it would be one of the top 3 barriers stopping someone from buying their own home.
Commenting, Paul Broadhead, Head of Mortgage Policy at the BSA said. “Care is always needed in interpreting consumer views in the aftermath of a political event like the General Election, particularly when the result is unexpected. We saw a similar fall in consumer confidence after the Referendum in June last year. However, by September 2016 confidence had largely bounced back.
“Whilst the political effect may be short term, some of the underlying economic fundamentals are becoming more of a challenge. Over the past year, annual CPI inflation has picked up, reaching 2.9% in May, whilst the latest earnings figures for April show that wages grew by just 1.7% in the year. This means that consumers need to spend more just to maintain their current standard of living, a significant extra pressure for those who are saving for a deposit. Mortgage rates, however, remain at historic lows and the market is highly competitive for those who do choose to purchase, whether for the first time or to move up the market.”
