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1st Jun 2009
Housing market confidence returns
Housing market confidence returns
Public confidence in the housing market is higher than at any point since September 2007 and the Northern Rock bail out, shows propertyfinder.com’s May survey of confidence in the housing market.
Some 60% of the 2,050 respondents thought house prices would rise by May 2010, with only 32.5% forecasting a fall. 8.5% of respondents thought house prices would be unchanged in twelve month’s time.
The survey shows a healthy rise on April when half of respondents, 49.9% believed house prices would increase in the next twelve months and is the sixth consecutive month of improving confidence.
The rise in confidence suggests the number of housing transactions is likely to grow.
Transactions fell sharply to 24,770 in January (latest data available) according to the Land Registry, the lowest level since records began and 31% lower than the previous month and 80% below their peak in August 2007.
This trend should now begin to reverse claims the survey. There is an 84% correlation between Land Registry transactions and propertyfinder.com’s confidence monitor, indicating that those seeking to buy or sell a property will now be able to do so more quickly.
With mortgage approvals also on the up (+23% in March* since the start of 2009), the housing market is picking itself up off the bottom.
Overall, those surveyed predicted house prices will increase 1.3% by May 2010.

Nicholas Leeming, director of propertyfinder.com, commented: “A large majority believe the housing recession is almost at an end. Although prices may yet drift a bit lower before beginning their recovery, the worst is now behind us. We should not expect a renewed boom however.
"The market is still in intensive care and expectations for price growth are very modest – at just 1.3% more or less in line with likely inflation. Transactions are much more important than prices – unlocking the log jam and getting people moving again boosts consumer spending and provides business for the legion of trades and professions who depend on house moving and renovations.”
More affordable mortgages (both due to lower rates and lower house prices) were the main reason for optimism, with 31% of home buyers and sellers believing they will drive house price growth.
But, the positive sentiments were not wholly shared by first time buyers. First time buyers expected prices to grow only 0.7% in the next twelve months and only 9% thought mortgages are at an affordable level. Second time buyers were most optimistic, predicting a 5.4% increase in prices by May 2010, followed by property investors who forecasted a 2.5% rise.
Leeming adds: “There is still caution underlying the renewed sense of optimism. The fear of unemployment is the overriding concern and four out of five people regard it as the main factor tempering house price growth in the coming year. The fall in house prices nationally and the Stamp Duty holiday mean the first rung is tantalisingly close, but ultimately out of reach for many first time buyers who still can’t get access to finance. The situation won’t change unless concerted efforts are made to improve mortgage availability.”
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