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House price pessimists expecting falls

House price pessimists expecting falls

Category: Mortgages

Updated: 25/10/2010
First Published: 25/10/2010

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 It is now over 6 months old so the content may be out of date.

More potential home-movers believe house prices will be lower in 12 months' time than those who think they will be higher. For the first time since Rightmove began its consumer confidence survey, the so-called 'price pessimists' are outnumbering the 'price optimists'.

One in three (32%) people thinking about moving are now predicting house prices will fall, compared with just one in ten (11%) who thought the same a year ago. Around a quarter of those surveyed (27%) believe prices will be higher in 12 months' time, while just over a third (36%) think prices will be more or less the same.

The resulting picture is one where home-movers are fairly evenly split into three different camps on the immediate direction of house prices, a picture that Rightmove said it has not previously seen.

"If you saw such an even distribution in opinion after using an Ask the Audience, you'd probably follow very quickly by using your Phone a Friend," said Miles Shipside, director of the property website.

"This time last year, 56% of respondents to our survey asserted that house prices would be higher in a years' time and that proved to be an accurate forecast.

"However, this quarter the majority is gone and opinion is divided. It's unusual to see such a split, but it shows that current economic uncertainty is forcing people to take sides in their view of the housing market.

"When sentiment is split as it is, or when there is no clear and prevailing view, a typical reaction from potential home-movers is to take no action."

Although a lack of available mortgage finance continues to hamper many prospective buyers, the survey found that concerns over the economy and fears of a squeeze on household incomes were now also putting doubts into people's minds.

"After months of speculation, the realities of the Government's comprehensive spending review are upon us and it is clear from this survey that the success or failure of the cuts in the wider economy will have a big impact on the property market," added Mr Shipside.

"It will be interesting to see whether the rise of the price pessimists will continue given the new economic landscape. However, it shouldn't be forgotten that a drop in house prices improves affordability and may bring prices into reach for some potential buyers currently unwilling or unable to proceed."

Although mortgages are not as easy to come by as they once were, it is still possible to find competitive deals for homebuyers with relatively small deposits. For instance, Yorkshire Building Society has a number of mortgage deals available to borrowers with only a 10% deposit, while First Direct and Northern Rock both have deals open to those with a 15% deposit.

Mortgage brokers such as Mortgage Solvers also have the expertise and product knowledge that could make the difference between managing to secure a mortgage deal or not. For most people with a mortgage, the importance of arranging life insurance cover should not be overlooked either.

A broker such as LifeQuote can quickly and easily help you find the most competitive life insurance deals to make sure your family is protected should the unthinkable happen.

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