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Confidence grows in the UK housing market

Homeowners who are considering selling their property in the next few months will be pleased to hear that there has been an increase in confidence in the housing market over the past three months.

According to the Halifax’s latest quarterly Housing Market Confidence tracker, the headline House Price Outlook balance (i.e. the difference between the proportion of people across Britain who expect the average house price to rise rather than fall) stood at +40 in June. This figure represents a 7% increase over the previous quarter, and is apparently the highest score on this measure since April 2011, when the tracker began.

Rising house prices

Around 52% of people expect to see an increase in house prices over the next 12 months, with optimism greatest in London where as many as 73% predict a price rise. Optimism is not so high in in the North West however, where only 35% have any confidence in a rise in house prices.

London also has positive expectations about the level of the expected price rise, with as many as 50% predicting that house prices will go up by at least 5%. This is double the UK average (24%), and is a substantial increase from 20% in 2013 quarter 1 and 18% a year ago.

Obstacles still remain

“Sentiment regarding the outlook for house prices has improved markedly over the past quarter, continuing the trend seen since late 2012,” commented Martin Ellis, housing economist at the Halifax.

“This increase in optimism is partly due to house prices being stronger than expected in the first half of the year. We continue to see a clear north / south divide with significantly higher proportions of people expecting prices to rise in the south than elsewhere in the UK,” he added.

However, Martin Ellis also warned that the market still faces a number of obstacles, including the fact that house prices continue to remain above the historical average in relation to earnings, which will prevent house prices from accelerating too sharply.

Buying v selling

Although attitudes towards selling have improved, the Halifax found that the net balance remains against selling. According to the tracker, only 30% believe that the next 12 months will be a good time to sell residential property, compared to 57% who think that it will be a good time to buy.

Nevertheless, the tracker did find that 23% believe the next 12 months will be good for both buying and selling property. This is an encouraging development, as the comparable figure for the previous three months was only 16%.

The main barriers that appear to be preventing people from buying property include being able to afford a deposit, and concerns about job security. On a more positive note, however, the tracker discovered that the various initiatives introduced to help stimulate the housing market, such as the funding for lending scheme, did seem to be having an impact.

The tracker also found a gender divide when it comes to housing market confidence, with men being the more optimistic sex. According to the figures, 54% of men predict that house prices nationally will increase in the next 12 months compared with only 49% of women.

Consumer Sentiment Index

The findings of the Halifax Tracker with regards to increasing confidence are supported by the results of the Lloyds TSB Spending Power Report for June. According to this report, the Consumer Sentiment Index reached its highest level on record (since November 2010) at 112 points. Confidence is now apparently ten points higher than at the end of 2012 and 22 points higher than in March 2011, when they reached a historic low of 90 points.

The Spending Power Report looked at consumer sentiment towards the housing market, and found that the number of those who state the housing market to be ‘not good’ or ‘not at all good’ dropped by 2% for the month to 69%.

This compares with 27% who believe it to be ‘somewhat good’ – the highest level reached since the study began in November 2010. Pessimism towards the housing market remains strongest in the North of the UK where 76% feel it is ‘not good’ or ‘not at all good’.

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If you are looking to buy or sell property in Scotland then contact our Glasgow based solicitors today. Complete our online enquiry form here or come in to see us at one of our offices.