Optimism returns to UK housing market after mid 2014 dip, says BSA

Regardless of potential uncertainties such as the forthcoming general election, optimism has returned to the UK property market after a dip in the middle of 2014, a new survey shows.

Some 36% of respondents to the property tracker index from the Building Societies Association said they believe that now is a good time to buy a home.

The rebound since September is particularly marked by a substantial drop in the number of people who think now is a bad time to buy. Taken together, the Property Tracker index has bounced back from a 9% low in September 2014 to 23%. 

It points out that the dip in 2014 coincided with the introduction of new mortgage regulations and the announcement by the Financial Policy Committee of actions to limit lending in the housing market. Results now indicate that transaction volumes may begin to slowly pick up after cooling off late last year.

Despite average wages increasing and high levels of employment, raising a deposit is the greatest barrier to buying a home. Overall, 59% of those surveyed say that this is the biggest hurdle they have to overcome, up by three percentage points on December 2014.

The future prospect of a rise in the Bank Rate is an issue for many. Over one in 10 borrowers say that they would be forced to miss a payment on a bill if interest rates rose by 1% over the year ahead. A further 12% said that making loan repayments would be a constant struggle.

‘Optimism in the housing market is back after a long, slow winter. Conditions in the mortgage market and the wider economy are improving and this confidence is driving consumer sentiment, especially those looking to purchase a home,’ said BSA head of mortgage policy, Paul Broadhead.

‘Consumers and providers are also cheered by the fact that house building is starting to increase, household finances are less squeezed and inflation has fallen to 0%. Even if deflation happens, provided it is short lived and is not generated by a fall in demand in the economy, it should not be damaging,’ he pointed out.

‘The Financial Policy Committee will keep watching property prices and sales volumes carefully. It, saw the need to act last year and now has a range of new tools at its disposal. A more sustainable cure for the affordability challenge is increased housebuilding,’ explained Broadhead.

‘Earlier this month we asked for a revolution in the provision of new housing in our discussion document Housing at the Heart of Government. Like millions of others, we now await the outcome of the general election to discover whether housing will sit at the top of the political agenda as promised,’ he added.

According to Paul Smith, chief executive officer of haart estate agents, it should be remembered that the last two years have been full of very positive news, particularly for first time buyers.

He pointed out that they have benefitted from the introduction of Help to Buy, stamp duty reform, low mortgage rates and now 0% inflation and the prospect of a first time buyer ISA and the firm estimates that first time buyers are making a total saving of around £12,000 off the back of all this.
‘But it is important to emphasise that now is also a great time to sell and move up the property ladder. We anticipate that average property prices will bounce back up in the post-election period and although a home owner looking to move will see the value of their property rise between now and post-election, the value of their next home will also increase and if they are moving into a more expensive property the increment will be greater after May,’ he added.