The BSA’s Property Tracker highlights improving affordability over the past twelve months; in June last year mortgage repayments were thought to be a barrier for almost half (49%) of consumers. This corresponds with average mortgage rates falling from 3.73% in June 2014 to 3.19% today. Lack of job security has also fallen as a barrier, whilst raising a deposit – the biggest challenge, remains steady (59%).
The unemployment rate in March was just 5.5%, down from 6.8% a year earlier. Towards the end of 2014 households also began to experience wage growth in real terms for the first time in many years. Consumer price inflation has faced downwards pressure from falling oil prices and in April the consumer price index turned negative for the first time since 1960. At the same time average earnings have grown, albeit modestly.
With the economic outlook improving, over half (56%) of people also think house prices will rise over the coming year. Only 12% said they didn’t think now was a good time to buy a property – the lowest on record since Property Tracker began in 2008.
Demand has picked up in recent months and 70,000 loans for house purchase were approved in April, up 6% compared to the 66,000 in April last year. This means there will be continued pressure on deposit requirements. Raising a deposit remained the greatest barrier to property purchase in June. 59% of respondents cited this as a barrier, unchanged from March and on par with the 60% in June last year.
Paul Broadhead, Head of Mortgage Policy at the BSA, said:
“Whilst it is good news that sentiment remains robust in the housing market, we are still seeing some uncertainty. The number of people who believe now is a good time to buy a property has fallen by a few percentage points in the past quarter – possibly a result of the prospective Bank Rate rise towards the end of this year or early next.
“That said, with competition returning to the market, it is pleasing that prospective buyers now have more options when they do take steps to owning their own home. Just last week, data from Moneyfacts revealed that building societies were winning the mortgage war when it comes to rates. The average building society rate is 2.98%, 0.21 percentage points lower than the market."
