Confidence in UK housing market stuck at the lowest levels

Confidence in UK housing market stuck at the lowest levels

Confidence in UK house prices remains at the lowest levels seen since 2013, according to the latest Halifax Housing Market Confidence Tracker.

Half of those surveyed expect house prices to rise over the next year, the same as autumn 2017 and remaining at the lowest level since April 2013 (45%).

However, fewer people are now negative about the housing market, with 17% predicting a fall in prices over the next year, down from 20% six months ago, with 26% expecting prices to stay flat.

Base Rate increases not a major concern for mortgage holders

Less than a third of existing mortgage borrowers (29%) are concerned about the possibility of rising interest rates affecting their ability to meet their monthly repayments. This has fallen from 42% in 2014 and, despite the base rate increase in November 2017, compares with 36% expressing concern about affordability six months ago.

On being asked how much monthly mortgage payments would have to increase by before they would struggle to meet them, almost half (47%) said above £150 or that they would face no difficulties. Only 5%felt that an increase of £24 or less a month would be an issue, with a quarter point increase on the average mortgage (£156,000) equating to around a £17 rise in average monthly payment.

Similarly, interest rates are not considered a major obstacle by those surveyed when it comes to buying a home. Instead, the ability to raise a deposit continues to be the main issue buyers face, followed by concerns around job security and rising property prices

Russell Galley, Halifax Managing Director, said:

With mortgages the most affordable they have been in a decade, it is perhaps unsurprising that a proportion of people remain unconcerned by the prospects of a base rate rise. This research suggests that for the majority of mortgage holders, there would need to be multiple rate increases before the affordability of their repayments becomes an issue.

“Housing market optimism remains at a five year low and this echoes the subdued house price performance and activity levels we have seen since the end of last year, albeit set against a positive outlook for the majority who believe house prices will increase over the next 12 months. Indeed, it’s encouraging to see fewer people now predicting a fall in house prices compared with six months ago. Overall, we still expect house prices to rise in line with our forecasts for the rest of the year.”

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