Confidence in housing market stabilises after record decline

LLB Reporter

Source: Fábio Perez via Flickr

According to Halifax

Confidence in the UK housing market has stabilised following a record decline, according to the latest Halifax Housing Market Confidence Tracker.

The survey, which tracks House Price Optimism (HPO) – consumer sentiment on whether house prices will be higher or lower in a year’s time – has shown a small improvement (+2 points) from a net +42 in October 2016 to +44. This improvement followed a record fall in October 2016 following the EU referendum result.

HPO peaked at +68 in May 2015 around the time of the General Election. The lowest level ever recorded was -2 in October 2011 after a period of declining house prices – the only time it has ever been in negative territory.

Nearly six in 10 (58 per cent) expect the average property price to rise in the next 12 months, compared to just one in 10 (14 per cent) who expect prices to fall. However, this compares to a record high of 72 per cent who were anticipating price rises in May 2015.

Among those who expect the average price to rise, there has been a shift towards expecting more modest rises; those expecting rises of up to 5 per cent have increased from 26 per cent to 30 per cent since October. Over a quarter (28 per cent) expect prices to be higher by 5 per cent or more.

UK average house prices over the last year rose by 3.8 per cent to £219,949 (February 2017).

Martin Ellis, Halifax housing economist, said: “House Price Optimism is little changed since the October 2016 measure, which is significant because it was the first post-Brexit survey and recorded the steepest fall since the tracker began. The latest results suggest that consumer confidence in the housing market is potentially settling into a new lower ‘normal’.

“This sentiment echoes the slowdown in the annual rate of house price growth, which has more than halved over the past 12 months.”

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