House price worries weigh on confidence

CONSUMER confidence dropped for the sixth month in a row in May, raising fears the economy is approaching a dangerous turning point.

Worries over house prices pulled down optimism to its lowest since November 2020, according to Yougov and the Centre for Economics and Business Research, indicating that gloom among households is worse than at any point during last year’s lockdown.

Households are also increasingly nervous over their job security, suggesting that the confidence given to workers by the record number of vacancies on offer by businesses may be fading as fears grow about a downturn, caused by the cost of living crisis.

The YOUGOV/CEBR index is still in positive territory, coming in at 102.3. That is down from 113.6 a year ago but still above 100, the point which divides optimism from pessimism.

Despite staying above that mark, the index’s persistent fall shows confidence is taking a turn for the worse with some speed.

Kay Neufeld, at the CEBR, said it represents a “downward spiral” in confidence. “The fact that the four measures covering job security and home values have all fallen back suggests that the slowdown is starting to affect other sectors of the economy, with the housing market in particular looking set for a correction in the face of rising borrowing costs,” he said.

“Looking for a silver lining, we note that at least the pace of falls has started to slow, with the 0.6-point contraction being the mildest since December 2021.”

‘It is a downward spiral. Looking for a silver lining, we note that at least the pace of falls has started to slow’