Housing market sentiment falls to all-time low

Find out how many people think now is a good time to buy a house…

Housing market sentiment falls to all-time low

Consumer confidence in the housing market has continued to decline, with the latest Property Tracker survey from the Building Societies Association (BSA) revealing that only 15% of people think now is a good time to buy a house, down from 26% a year ago.

According to the BSA, this is the lowest that housing sentiment has fallen since the Property Tracker survey began in 2008.

Those disagreeing that now is a good time to buy property jumped to 52% in September from 39% in June. Moreover, 35% said they think house prices will continue to rise in the next 12 months, while 31% said they think prices will fall within the same period and 27% said they were unsure.

The survey also noted some significant regional differences, with 19% of people in London and the North East agreeing that now is a good time to buy property, compared to only 11% in Scotland. 

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Additionally, for 65% of respondents, the most significant barrier to buying a home is the affordability of mortgage repayments, considering the series of bank rate increases that started in December 2021. Other barriers identified by respondents were rising deposit requirements caused by house price growth (57%) and having access to a large enough mortgage (48%).

“I expect that affordability for house buyers will remain a key barrier to homeownership for some time as many will not be able to borrow the same amount in the higher interest rate environment,” Paul Broadhead, head of mortgage and housing policy at the BSA, said. “This may well lead to some downward pressure on house prices. However, the lack of supply of properties on the market compared to the number of buyers may still continue to provide some support to prices, as will the cut to stamp duty.”

The Property Tracker survey is run by market research company YouGov for the BSA every quarter, with around 2,000 adults across Britain serving as respondents. The latest survey was conducted twice, first when the Energy Price Guarantee was announced at the start of September, and then again towards the end of the month after the latest bank rate increase and Chancellor Kwasi Kwarteng’s mini budget. For the first round, 14% of homeowners and 28% of renters said they didn’t feel confident about repaying their housing costs. This fell to 11% and 26% when the respondents were asked again a second time.

“Inflation continues to rise, and we are by no means sanguine, but it’s encouraging that currently almost nine in 10 homeowners are not expressing concern about keeping up with their mortgage payments,” Broadhead said. “This is likely to be because around 80% are on fixed rates and therefore it will take time for higher mortgage costs to be felt by many. It’s not surprising that renters are less confident, with around a quarter being concerned about meeting their housing costs.”

Broadhead added that “the mortgage market remains open,” even with the current volatility in financial markets impacting mortgage availability and prices.

“Borrowers will be able to re-mortgage when their fixed rate ends. It is important for people to start planning for when their current deal ends, and consider how any new deal will impact their household budgets,” he said.