House prices expected to rise

Nia Williams

June 13, 2011

Although house prices fell by 1.2% on a quarterly basis in April, one in three of survey respondents actually predicted that average UK house prices will rise this year, whilst 23% expect a fall in prices.

This means, on balance, more people in Britain think house prices will rise than fall, revealing a positive House Price Outlook Score of +9 percentage points.

The majority of Britons think that any house price movement over the next year will be relatively small with more than a half (57%) expecting any change to be between +5% and -5%. A further 26% think that house prices will remain the same. Nonetheless, almost a quarter (24%) believe there will be more significant change in house prices with increases and decreases predicted of 5% or more.

Half of Britons (50%) think that it would be a good time to buy over the next three months – more than three times the proportion that felt that it would be a good time to sell (14%). Just 15% were positive about both buying and selling in the next 12 months, suggesting that the level of housing market activity may remain subdued.

The survey highlights concerns among consumers over the uncertain outlook for the UK economy. Just over a quarter (26%) expect their personal financial circumstances to worsen over the next few months with a further 54% anticipating no improvement.

Consistent with such concerns, 52% identified worries about job security as one of the main hurdles to buying a property: more than any of the other potential headwinds facing home buyers. Respondents also picked out household finances (31%) and concerns about rising interest rates (22%) as major barriers to buying a property.

The tightening in lending criteria since 2007 has put off many from attempting to enter the market. Half of those questioned (50%) thought that being able to raise a deposit was a major barrier to home buying. Additionally, over a quarter of all respondents (27%) thought that the general availability of mortgages was one of the main obstacles to buying a property.

Suren Thiru, housing economist at Halifax, commented: “More Britons expect house prices to rise rather than fall over the next year. This is likely to partly reflect the relatively low burden of servicing mortgage debt.

“However, confidence in the UK housing market is likely to remain subdued over the coming months, given consumers’ concerns over the outlook for the UK economy in general, and the jobs market in particular.”

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