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Confidence in the outlook for house price growth in the UK hit its highest level in four years following the general election in May, but dropped back last month. The dip in confidence in June comes despite continued rise in real wage growth, together with record low numbers of homes available for sale pushing average house prices over £200,000 for the first time ever, according to the Housing Market Confidence Tracker report from the Halifax. House Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64 it remains substantially higher than at the beginning of the year when it was +52 in the January survey. Nevertheless, while the May high was short lived, the percentage of Britons predicting an increase in the average property price of more than 5% over the next 12 months has still risen from 34% to 38% in the last quarter, comparing the March and June 2015 measures, respectively. This increased optimism also corresponds with a fall in the net figure for buying sentiment from +35 in February 2015 to +25 in June 2015. Some 56% said in June they think it will be a good time to buy property over the next 12 months, compared to 61% who said this in February 2015. At the same time there’s been an increase in the net figure for selling sentiment from +27 in February 2015 to +32 in June 2015. With the Governor of the Bank of England saying improving economic figures means an interest rate rise has moved closer, 48% expect mortgage interest rates to be higher in 12 months’ time compared to 45% in the first quarter of the year. Londoners are less likely than those in any other region to say it is a good time to buy at 38% compared with 56% of Britons overall, making it the only region where the proportion who think the next 12 months will be a bad time to buy exceeds the proportion who think it will be a good time. Those in the South East are more confident than in any other region that house prices will be higher in 12 months’ time at 90% compared to 69% of Britons overall, with those in the North East and the West Midlands the least likely to say this, both at 59%. ‘Economic growth, together with increasing real earnings growth and historic low mortgage rates are all supporting the continued rise in house price optimism. It’s not been a smooth increase though as while there was a noticeable spike in optimism straight after the General Election result, this has now fallen off slightly,’ said Martin Ellis, housing economist at the Halifax. ‘A key factor in maintaining optimism over house price growth has been the fact that the stock of homes available for sale is currently at record low levels. If this growth is to be sustainable then we need to… Continue reading →
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