House price sentiment ‘back to pre-referendum levels’

House price sentiment ‘back to pre-referendum levels’

Consumer expectations about house prices have bounced back to pre-EU Referendum levels after a period of uncertainty following last year’s vote to leave the EU.

Figures from the Building Societies Association (BSA) Property Tracker survey reveal almost half of consumers (49 per cent) expect house prices to rise over the next 12 months, while just 10 per cent expect them to fall.

Expectations dipped following the referendum, with 42 per cent of those surveyed in September 2016 expecting prices to rise and 17 per cent anticipating falls amid fears of an immediate economic downturn.

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But December 2016 witnessed a resurgence of optimism with 44 per cent expecting price gains, and this month (March) saw the figure surpass the pre-referendum high of 48 per cent in June 2016.

More than two-thirds of consumers (67 per cent) report raising a deposit as their main obstacle to buying their own home, up from 64 per cent in December 2016, while 49 per cent now say getting a large enough mortgage is a barrier, up from 44 per cent in December.

Despite a drop in the rates for many new mortgage products, the proportion of consumers saying that affording monthly mortgage repayments was a barrier to homeownership remained high at 42 per cent.

The figures are based on YouGov surveys of 2,021 adults between 1-2 March and 2,022 adults on 1-2 December 2016.

Paul Broadhead, head of mortgage policy at the BSA, said: “The worst case scenarios for the economy immediately after the UK voted to leave the EU clearly didn’t come to pass, and this has fed through to people’s higher expectations for future house prices. 

“However, we are only just starting the negotiations around the exit process. Consumer views on the housing market, and their prospects in it are likely to alter as the negotiation proceeds.

“Today, with actual house prices still rising above earnings in many regions, raising a deposit is an intractable issue. It particularly impacts first time buyers, but second steppers aren’t immune. Higher consumer price inflation will also adversely affect people’s ability to build a deposit in the year ahead.

“No single action can fully address the housing issues consumers face, but increasing the supply of homes would go a long way to limit rising prices. A period of house price stability would in my view be welcome.” 

Greg Heath, managing director at Preston-based Derbyshire Booth Financial Management, said he had not witnessed a post-referendum downturn in sentiment.

“I think it has been fairly consistent,” he continued. “The buying process is so convoluted nowadays – in the old days you could buy a house in a few weeks, now it is 3 months at times – but whether it is buy-to-let or first-time buyers, across the board it has been consistent.”