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Housing market confidence dips despite strong fundamentals

Housing market confidence dips despite strong fundamentals

Confidence in the housing market dented slightly last month, according to Halifax’s latest market tracker, despite the fact that interest rates were held at the record-low 0.5 per cent again and average house prices continued to climb.

The net proportion of consumers who now believe the next 12 months will be a good time to buy increased from March to April, while the net proportion who think that the next year will be a good time to sell fell.

The lender’s confidence tracker monitors public sentiment towards the housing market. The survey, conducted by Ipsos Mori, was undertaken during April and found that 63 per cent of 1,025 people expected the average property price to be higher in one year’s time – compared to 67 per cent who said this in March – despite a number of positive short term factors.

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These include the emergence of record low mortgage rates, falling swap rates, GDP growth falling to its slowest pace in three years and Office of National Statistics figures showing negative inflation of 0.1 per cent in April.

These, along with other factors such as rising employment levels, should start to see the consumer housing outlook improve over the next few months, according to Halifax.

Craig McKinlay, the bank’ mortgages director, said that the fundamentals for the housing market remain positive.

“Going forward the key factor in how consumers adjust to any changes in rates will be the way in which they manage their disposable income.”

Earlier in May, Halifax’s monthly house price index revealed that a lack of property supply was continuing to force house prices up, with the average price now just shy of £200,000, growing by 8.5 per cent in the 12 months to April.

Back in February, the housing market confidence tracker showed optimism at its lowest level for 18 months at the start of the year, as lending got off to a sluggish start.

peter.walker@ft.com