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Split in housing market confidence

Split in housing market confidence

Category: Mortgages

Updated: 28/07/2014
First Published: 28/07/2014

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 It is now over 6 months old so the content may be out of date.

Is it a good time to sell your home? What about if you're looking to buy? Well, it seems that opinions could be divided, with latest figures revealing a clear split in housing market sentiment between buyers and sellers.

The latest quarterly Halifax Housing Market Confidence Tracker shows that 57% of respondents feel that it would be a good time to sell their home in the next 12 months, compared with 32% who think it'll be a bad time, producing a net balance of +25. This marks a rapid improvement over the last two years – in the final three months of 2013, the balance stood at -6 – and it's the highest score seen since the survey began in 2011.

Sentiment is even stronger among current homeowners, with 63% of owner-occupiers stating that now would be a good time to sell. However, things aren't quite so rosy for prospective buyers. The proportion of those who feel that now is a good time to buy has fallen to a net balance of +5, down 29 points in the last three months – the largest fall in this measure since 2011 – and those in London and the South East are particularly negative about their buying prospects.

Craig McKinlay, mortgages director at Halifax, commented: "Over the past two years consumer confidence has continued to grow, however, it appears that we've reached a tipping point, with the equilibrium between buyers and sellers much more out of sync.

"The results highlight the regional variations, as now people believe that it's a good time to sell but not buy, particularly in London and the South East where house price expectations are generally higher and buyers appear to be less inclined to rush into buying a property than we have seen over the past 12 months."

So, even though homeowners have never been more optimistic about house sales, the outlook for the purchase market is at a record low.

But just why is that? Well, the report also identified a number of barriers to buying, and rising house prices are becoming a significant factor – 35% of respondents cited this as a key barrier, up from 20% a year ago. However, concerns about rising interest rates are also becoming a problem for 18% (up from 13% in 2013), but raising a deposit remains the biggest barrier, cited by 55% of respondents.

This perhaps isn't surprising, particularly when rising house prices are factored in. The higher the cost of the house the bigger the deposit will need to be, making an already challenging situation even harder. Saving as much as possible is the only option – unless you're lucky enough to have the bank of Mum and Dad to fall back on – and then it all comes down to finding a mortgage that can keep your repayments in check.

If you're thinking about getting on the ladder, it may be a good time to take the plunge before prices rise even more. The survey also identified the house price expectations of British adults, and found that 71% of respondents predict the average UK house price to increase over the next year.

Of those, 30% expect prices to rise between 5% and 10%, while 15% think the rise will be even higher, potentially making prices an even bigger barrier to homeownership. The headline House Price Outlook balance (i.e. the difference between the proportion of people that expect the average house price to rise rather than fall) remained relatively stable at +66, compared with +65 in the first three months of the year, with just 5% of respondents predicting a fall in house prices over the next year.

There's evidently a clear divide between the sentiment of buyers and sellers. Current homeowners will be relishing the chance to secure a decent profit from their home by selling when prices are rising, but what about if you're looking to buy? Although confidence is low, given the expectation of rising prices, many could be contemplating making the move before prices rise even more.

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