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Do you feel optimistic about the housing market?

Do you feel optimistic about the housing market?

Category: Mortgages

Updated: 27/03/2015
First Published: 27/03/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There's plenty of great news doing the rounds about the housing market at the moment. Not only are mortgage rates at record lows, but average fees are also falling, and there's far more choice for first-time buyers looking to get their foot on the ladder, too. As well as all that, house price growth is showing signs of moderation, which will come as welcome news to those wondering how to take the next step.

And that's before we even get to the likes of improving economic conditions, higher employment levels and positive wage growth – all in all, things are looking good, but has that translated into optimism about the housing market as a whole?

Growing optimism…

According to research from the Building Societies' Association (BSA), it certainly has! Their latest Property Tracker survey, a quarterly report that looks at housing sentiment among buyers and sellers, found that 36% of respondents felt that now is a good time to buy. This is a clear improvement from December when 31% said the same, and is also the highest figure seen since last March.

This recovery has been particularly marked by a drop in the number of people who think now is a bad time to buy: taken together, the quarterly index has bounced back from a low of 9% in September 2014 to 23% today, coinciding with indications that transaction volumes are increasing.

"Optimism in the housing market is back after a long, slow winter," said Paul Broadhead of the BSA. "Conditions in the mortgage market and the wider economy are improving, and this confidence is driving consumer sentiment – especially among those looking to purchase a home."

Are you one of the many feeling the benefits? Hopefully, you're a whole lot more optimistic about the market and your potential to buy that all-important home, and if you're thinking of selling, now could be a great time to do so. But, there are concerns that housing affordability could still be an issue.

… but faltering affordability

Additional research from Lloyds Bank has revealed that housing affordability in UK cities has deteriorated in the last year, led by rising house prices across the country. The figures show that the average UK city house price has risen by 7% in the last 12 months, from £181,667 in 2014 to £195,107 today. This has resulted in affordability worsening from 5.8 times gross average earnings to 6.1, and marks the second successive annual decline in affordability.

However, given the rapid pace of house price growth in recent years, this doesn't come as a huge surprise. News that price growth is now moderating will be even more welcome, while further positivity can be seen in the fact that, despite the annual deterioration, affordability in the nation's cities is still, on average, 15% lower than the peak of 7.2 times earnings in 2008.

The overall improvement in affordability since the housing boom has been caused by a combination of average house prices in UK cities falling by £12,630 (-6%) since the height of the housing boom, and an increase in the gross average annual earnings of £3,058 (+11%).

So, overall, things are looking good for the housing market. Hopefully you won't have seen your affordability ranking drop too much in recent months, and if anything, you'll be feeling the benefits of improved economic conditions. Why not take advantage of things?

If you're feeling optimistic, don't delay – mortgage rates are at record low levels, so now's a great time to realise your house buying ambitions! Whether you're looking for a first-time buyer mortgage, want to take the next step up the ladder or simply want to remortgage to a better deal, check out our best buys to make the most of the improved landscape.

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