Homeowners confidence about price rises
15 June 2004
Confident consumers are backing the chances of further house price increases, with figures up 11 per cent.
The Woolwich, which tracks consumer confidence in the housing market, has released its figures for May. These are close to the peak levels of 2002 when confidence soared to a record 68 per cent.
Currently, the number of people who expect more rises has increased by 11 per cent, from 56 per cent to 67 per cent.
The head of mortgages for Woolwich and Barclays, Andy Gray, says: "Consumers' confidence goes from strength to strength, but with further rate rises predicted in the second half of this year, we expect the rate of house price inflation to steady towards the levels seen in 2003."
He added: "This means that consumers need to be realistic about the capital growth they can expect from their home in the immediate future, and view any purchase as a long term investment as we expect house price inflation to be neutral by the end of 2005."
The Woolwich feels that the current upward spiralling of house prices "is unlikely to be mirrored at today's rate in 2005".
In turn it believes interest rates will continue rising to five per cent by the end of this year.
It therefore expects "the growth of borrowing to slow down quite significantly as interest rates continue to rise."