Confidence in the property market slips
Here are the results from our latest Consumer Confidence Survey, where you tell us what is happening in the property market in your area.
Confidence inthe housing market slipped in November as home buyers and sellers absorbed the news that base rates had risen to 5% and that further increases may be on the way.
On average, respondents expect house prices to rise 5.2% over the next 12 months, down from 5.5% in October.
Although 79% of respondents expect the market to continue to rise and only a small minority expect price falls, three quarters (72%) fear further interest rate increases, while half (52%) fear mortgages will become affordable.
North-South divide - prices towards the north to rise less than earnings
The overall UK picture conceals very wide regional variation. In England, regions to the south expect a far stronger market than regions to the North. A number of regions in the Midlands and North of England expect house prices to grow more slowly than average wages.
Since October, optimism in the capital has actually increased with respondents increasing their expectations for price rises from 6.3% to 6.6%. Elsewhere in the UK, people are trimming their expectations for the housing market. Warren Bright, Cheif Executive of propertyfinder.com commented:
North of a line from Cheltenham to Chelmsford, there is a dramatic change in sentiment on the housing market. The strong performance of the City is driving the economy in the south, with rich bonus pickings supporting prices.
Conversely elsewhere in England, more subdued expectations for house prices suggest housing affordability may actually improve when compared to wages.
This presenty the Monetary Policy Committee with a dilemma. Another interest rate increase is clearly not necessary for well over half the country. Punishing everyone with higher rates to control house prices in the south risks destabilising the whole market.
Fortunately, people have healthy levels of equity in their homes, giving them an important cushion when they move. On average, buyers want a mortgage worth 61% of the value of their new home meaning that they have over £80,000 of equity to invest.
Regional results
London and the South East
The most bullish regions in the UK, both expecting house prices to rise significantly ahead of average earnings. In London respondents strongly believe their areas are up and coming while those in the South East see net migration boosting the market.
South West
More than any other region, the South West expect people to keep moving to the area, pushing up house prices on average by 4.8% over the next 12 months. However, it is also the region that most fears the interest rate increase. 90% expect rates to rise again.
East Anglia
Although East Anglican respondents expect prices to rise at least (+2.4%), their views are less polarised than other regions. A healthy 77% expect prices to rise, but there are few who expect either large increases or larger falls. East Anglians particularly highlighted net inward migration as a reason for the market to be supported. The large influx of Eastern European migrants is certainly supporting the housing market there, principally the rental sector.
East Midlands
People in the East Midlands also have less polarised views than average. 80% expect prices to rise by 3.9% on average. People believe the region is a good bet with property investors for rental purposes, although people are more likely here than elsewhere to believe that house prices are high relative to incomes (perhaps explaining why they believe prices will rise less than earnings).
West Midlands
In the West Midlands people are also opptimistic on the region's property investment potential. 76% believe prices will rise. On average people expect prices to rise 4.1%. As in the East Midlands, people are more likely here than elsewhere to believe that house prices are high relative to incomes. They believe prices will rise in closely line with average earnings.
Yorkshire & Humberside
With house prices almost 20% below the England and Wales average*, people again see investment potential for the region. Overall they expect prices to rise 4%, just in line with average earnings.
North
This is the least optimistic region in the country. Just 63% on average expect prices to rise, 3.6%. A quarter of respondents expect prices to be flat in the North.
North West
Like the North, the North West is relatively cautious.Here, 67% expect prices to rise, by an average of 4%. Relative optimism in manchester is reponsible for pullin up the average for the region.
Scotland
Buoyant confidence in Scotland reflects continued momentum inthe country's market and the strong contribution that financial services make to its economy. Booming financial markets have a disprportionate effect on the housing markets in Edinburgh and Glasgow.
Wales
Wales is still paying catch up. With average house prices 23% below the average for England and Wales together*, there is stil room for growth in the Principality.
