Potential home buyers increasingly put-off by threat of rising interest rates and task of raising a deposit

28th July 2014

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Rising property prices, the threat of higher interest rates and the task of saving for a deposit are increasingly turning people off the idea of purchasing a home, says Halifax.

According to the lender’s latest Housing Market Confidence tracker, while the public have never been more optimistic about house sales, the outlook for the purchase market is at its lowest level since 2011.

The survey found that 57% of respondents feel it will be a good time to sell in the next 12 months, while 32% think it would be a bad time.

This is the highest score of this measure since the survey’s inception in April 2011, making a net balance of +25 compared with +12 in the last three months 2013 and -6 in the third quarter of 2013.

Sentiment towards selling is even stronger among owner occupiers with 63% stating that now is a good time to sell.

In stark contrast, the number which feel now is a good time to buy has plummeted to a net balance of +5, a fall of 29 points in the last quarter. This is the largest fall in this measure since the tracker’s inception in 2011. Positive sentiment fell by 16 points among owner-occupiers between the first and second quarter of 2014 – now at 53% – and those in London and the South East are the most negative.

Positive sentiment towards selling is highest in the East and South East, where 65% think it will be a good time to sell, compared with only 36% who say this in Scotland.

Craig McKinlay, mortgages director at Halifax, said: “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 for 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 a buying a property as we have seen over the past 12 months.”

 

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