Confidence in UK property market increasing
Confidence is growing in the UK property market with research showing four out of five people are optimistic and the latest price index confirming further growth.
Optimism is at a two and a half year high with four out of five expecting prices to increase in the next six months, according to a survey from property website Zoopla.co.uk, with the average increase predicted at 5.7%.
‘With the bad weather behind us and the recent stamp duty relief introduced for first-time buyers, confidence in the property market has bounced back well,’ said the firm’s commercial director, Nicholas Leeming.
However, Mr Leeming has significant concerns regarding the current lack of mortgage finance, particularly for first time buyers, which he regards as the biggest threat to a full recovery of the market.
Meanwhile the latest index from Halifax shows property prices bounced back in March, rising by 1.1%, after having fallen in February. It is the eighth rise in the past nine months, taking the average price to 9.1% above the low point reached last April.
The increase partly offsets February’s 1.6% fall and takes the average value of a home to £168,521. However, in the first three months of 2010 prices were only 0.6% higher than in the final quarter of 2009, compared with a 3.6% rise between the third and fourth quarters of last year.
Halifax housing economist, Martin Ellis, said it points towards a slowdown in house price growth. He said that a rise in the number of properties for sale is beginning to reduce the imbalance between supply and demand and is therefore likely to constrain the upward pressure on house prices.
Analysts, however, are not as optimistic as those taking part in the Zoopla survey. ‘The Halifax data reinforces our suspicion that house prices will be erratic in 2010 and we still suspect that prices may very well be no better than flat over the year,’ said Howard Archer, chief UK economist at IHS Global Insight.
‘Although the Bank of England may well hold off from raising interest rates until 2011, the overall economic environment is still far from supportive for house prices while credit conditions remain pretty tight,’ he explained.
‘Admittedly, it remains to be seen how much support to housing market activity and prices comes from the government bringing in a stamp duty holiday for the next two years for first time buyers on all properties costing up to £250,000,’ he added.
Catherine Penman, head of research at http://www.guardian.co.uk/money/propertyreal estate consultancy Carter Jonas, said March is historically a buoyant month for the housing market so it is no surprise to see prices rising again after a slight lull in February.
‘However, with a general election less than a month away we are likely to see prices suppressed in April when we would normally expect to see a flurry of activity post Easter. The property market is in a kind of limbo and we do not expect a clear trend to emerge until after the election when the true state of the public finances is laid bare and a clear strategy presented,’ she added.