More people confident to see house prices rise
CONSUMER confidence that house prices will rise over the coming year is stronger than 12 months ago, according to building societies.
But issues stemming from Brexit and the General Election are seen as significant risks to the housing market in 2020, the Building Societies Association (BSA) found.
Nearly three in ten (28%) people expect house prices to increase over the coming year - up by five per cent compared with a year ago.
Brexit, selected by 43 per cent of people surveyed, and the General Election result, selected by 30 per cent, are seen as being among the factors posing the biggest risks to the stability of the housing market in 2020.
Rising living costs, selected by 36 per cent, and weak economic growth (30%) are also significant perceived risks, the BSA’s “property tracker” survey conducted in November found.
The biggest barrier to home ownership remains raising a deposit, selected by nearly two thirds (62%) of the more than 2,000 people surveyed.
The Help to Buy Isa, which gives aspiring first-time buyers a Government bonus towards their savings, recently closed to new savers.
Paul Broadhead, BSA head
of mortgages and housing, said: “With a clear path still not set for Brexit, and with the election making an impact, market sentiment has remained negative since June 2017.
“Raising a deposit continues to be the biggest barrier to home ownership.
“With the Help to Buy Isa now closed to new applicants, it will be interesting to see how the new government addresses the issue of helping people onto the property ladder, along with the wider housing crisis.
“Those who have missed the deadline could still receive government support to buy their first home by opening a Lifetime Isa (Lisa).”
It was also reported this week that nearly two-thirds of Britain has become more affordable for homebuyers in the past year, analysis has found.
Yorkshire Building Society, which looked at official wage and house price figures across local authorities, found that homes have become more affordable in 64 per cent of the country over the past year.
Despite affordability improvements, average house prices in some areas are around 20 times the average local wage.
In other places, a home costs around three times earnings typically.
And buying a home in nearly half (49 per cent) of local authority areas is still less affordable now than before the financial crisis, the society found.
Yorkshire Building Society’s strategic economist, Nitesh Patel, said: “House prices have grown by an average of 43 per cent since 2009 - twice as fast as earnings (21 per cent) in the same period.
“The difficulty in affording to buy a home is one reason why house sales have not picked up in the past year, even though some of the key drivers for the housing market remain positive.
“The longer term outlook for people wanting to buy a home remains to be seen.
“Demand for home ownership is still strong and supply is limited, so, over the short to medium term, house prices could increase faster than earnings.
“This may continue to cause issues for home-buyers, particularly those buying their first home.”