Property confidence lagging
14 June 2004
Recent interest rate rises appear to be denting confidence in the housing market.
The balance of confidence in the market now appears to be on the side of the pessimists.
Between January and April, on average 84.3 per cent of assertahome.com's respondents believed house prices would rise over the following twelve months. In May this dropped sharply to 77 per cent.
A growing minority of respondents are blaming rising interest rates for a future fall in prices. 70 per cent of these pessimists now think rising rates will push the market into a downturn compared to an average of 57 per cent between January and April.
The managing director of assertahome.com, Jim Buckle, said: "House hunters across the UK still overwhelmingly expect house prices to continue rising over the next twelve months, but those in the pessimist camp are steadily growing."
He added: "Our survey shows that house buyers and sellers have clearly taken note that interest rates are on the up and this has begun to dent confidence in the housing market. Thursday's interest rate increase can only accelerate this process."
Yet, Mr Buckle did warn that: "The Bank of England should beware of overly aggressive interest rate hikes."
The South East of England has shown the most dramatic drop in confidence. In May just 68 per cent of South Eastern house hunters expected prices to rise in their region.
Mr Buckle described the South East as being "especially gloomy", and it is "the first region to begin feeling the pinch of higher interest rates."
This is less than the national average and far below the bullish Yorkshire and Humberside where 93 per cent are optimistic about the outlook for the next twelve months in their region.