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Property price confidence falls

08 September 2004
Just half of consumers now expect the value of their homes to increase over the next six months, according to a new survey.

This is a significant fall in confidence from just three months ago when two thirds of people (64 per cent) believed the value of their properties would increase in price, according to figures from building society Nationwide.

However, there is significant regional variation in confidence - with 67 per cent of those in Northern Ireland most convinced their houses will increase in value. People in Scotland (65 per cent) and North Wales (63 per cent) are also mostly convinced that property prices will keep rising.

The most pessimistic region of the UK is the east of England - where one in seven (14 per cent) believe their house will be worth less in six months.

The drop in confidence about house prices looks like it will also hit consumer spending - with only 28 per cent of those surveyed believing now is a good time to make a major purchase like a house or a car.

One area people do believe is still worth investing in is home improvements, with 61 per cent thinking now is a good time to purchase household goods.

The survey also found that more than two thirds of people (68 per cent) believe that the economic situation will be the same or better in six months time.

"Consumers are starting to moderate their expectations of house price growth . . . [and] appear more confident about investing in home makeovers than they are in taking on a major commitment such as a house or car," Stuart Bernau, Nationwide's executive director, commented.

More optimistically he added: "Although rising interest rates, higher energy prices and subdued real take home pay growth may combine to slow people's willingness to buy, the economic backdrop remains positive and we don't expect a slump in either house prices or household spending."

Nationwide surveyed 1070 people between July 19th and August 18th.
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