A quarter of home owners expect house prices to rise at least 5% in the next year

15th July 2013

Around a quarter of home owners expect the value of their home to increase by at least 5% in the next twelve months according to the latest quarterly Halifax Housing Market Confidence tracker.

The tracker reveals that the ‘headline’ House Price Outlook balance i.e. the difference between the proportion of people across Britain that expect the average house price to rise rather than fall stood at +40 in June.

Halifax says this is an increase of 7% compared with last quarter when the figure sat at +33 and is the highest score on this measure since the tracker began in April 2011.

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

“Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings. Such factors are likely to prevent a sharp acceleration in house prices.”

Some 52% of British adults predict the average UK house price will rise over the next year – an increase of 7 percentage points since March and 25 points higher since June 2012.

Londoners are the most optimistic with 73% expecting a rise. Those living in the North West are the least optimistic with 35% of respondents predicting that the average price will rise. Exactly half of Londoners expect house prices to rise by 5% or more over the next 12 months – double the UK average (24%). This is a substantial increase from 20% in the first quarter of 2013 and 18% a year ago.

The various initiatives designed to stimulate the market such as the funding for lending scheme, New Buy and Help to Buy equity share schemes appear to be working which is encouraging.

Despite this, there has been little change in buying sentiment. There has, however been a marked improvement in sentiment towards selling although the net balance remains against selling. A significantly higher proportion or 57% think that it will be a good time for people to buy than believe that it will be a good time to sell, at 30%, in the next 12 months.

Worries over job security and raising a deposit remain key obstacles to purchase says Halifax.

Mentions about being able to afford a deposit increased significantly over the past quarter with 64% of respondents highlighting this as one of the main barriers to buying a home compared with 67% in Q1 2013 The proportion identifying concerns about job security has stayed unchanged at 58%.

Prices are expected to rise in all regions, but there is a clear north / south divide

More people expect the average house price to rise than fall over the next 12 months in all regions. Whilst all regions have become more optimistic since the last survey, those living in London are the most optimistic with an overall net balance of +69, followed by the South East (+52) and the East of England (+49). In contrast, those living in the North West (+23), East Midlands (+25) Wales (+25) and Yorkshire and Humberside (+26) are the least optimistic.

Regionally, Wales has the highest proportion of people thinking that it will be a good time for people to buy at 66%, closely followed by the South East and East of England regions both at 63%. Whilst London has the lowest proportion with 47% of respondents feeling that it will be a good time to buy over the next 12 months, just below the West Midlands on 49%.

With 41%, London has the highest proportion of respondents who think that it will be a good time to sell during the coming year. In contrast, only 9% in Scotland believe that it will be a good time to sell.

Men are a little more optimistic than women about house price prospects

Some 54% of men predict that house prices nationally will increase in the next 12 months compared with 49% of women. The House Price Outlook balance for men stands at +43 percentage points compared with +38 percentage points for women.

Most expect rents to rise with 68% of respondents predicting that the cost of private sector renting will increase over the next year, continuing a steady upward trend since June 2012 when the figure was 61%.

 

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