Confidence in housing market falls

03 August 2004
It would seem consumers are gradually getting cold feet over the state of the housing market, with confidence slipping for the second month running.

The latest Woolwich Consumer Confidence Index is showing a three per cent fall this July.

This follows recent interest rate rises and comes ahead of a widely-anticipated hike this Thursday.

"This continued fall confirms our prediction that confidence would gradually decline as interest rate rises bite and people become more cautious about borrowing decisions," said Andy Gray, head of mortgages at Barclays and The Woolwich.

"With a rate rise predicted this Thursday and a further rise before the end of the year we would expect this downward trend to continue until the end of the year."

The three per cent fall comes from the fact that 62 per cent of homeowners believe their property will continue to increase in value, compared with 65 per cent in June and 67 per cent in May.

However, despite the downward trend consumer confidence is significantly higher than this time last year when it was at 55 per cent.

Barclays and The Woolwich are anticipating two 0.25 per cent interest rate rises by the end of this year and are subsequently advising consumers to review their finances in light of future increases.