Mortgages

Employment fears to dampen housing market activity: BSA

68% cited fears about job security as a barrier to homeownership, topping the list for the second consecutive quarter.

Rozi Jones
|
17th September 2020
house houses row bristol
"Forecasts of rising unemployment, and the imminent end of Government support schemes mean that lenders are rightly focused on risk and affordability."

Consumer sentiment on the housing market rebounded strongly in Q2, however longer term fears about job security may dampen future activity, according to research from the Building Societies Association (BSA).

Its latest consumer survey found that there has been a marked uplift in the number of people who say that now is a good time to buy a property - 37% in September compared to 25% in June.

However, 68% cited fears about job security as a barrier to homeownership, topping the list for the second consecutive quarter.

This time last year, job security was cited as a barrier by 37% and in March - before lockdown – by just 35%.

Across the regions, a greter proportion of those in the West Midlands and the South East saw job security as a barrier to property purchase with 76% and 73% respectively, compared to 62% in London and 63% in the North West.

In many areas house prices have been boosted by pent-up demand after lockdown, coupled with the stamp duty holiday. Looking ahead 12 months, 32% of people still believe prices will rise in the coming year, clearly going beyond the March deadline for the stamp duty holiday. Those in Yorkshire and Humberside and Wales were most sure at 40% and 39% respectively whilst just 23% of those surveyed in London and 25% in the North East thought the same.

When asked if they were more or less likely to move home because of the pandemic, 4% reported that they had already moved and 10% stated that they were more likely to do so. Looked at regionally, people in London (15%) and in Scotland (14%) were the most likely to move home because of Covid-19 and people in Yorkshire and Humberside (4%) and Wales, West Midlands and the South West all at 7% were the least likely to make a move.

Paul Broadhead, head of mortgages and housing at the BSA, said: “The boost in activity and transaction volumes in the housing market since full lockdown was eased is to be welcomed. Many people who were part-way through a move in March have been able to complete and there is no doubt that the virus has had an effect on people’s attitudes to home, and what in an ideal world they want and need from theirs. As our survey shows some have already taken action.

“Mortgage application volumes are strong, but it seems that completions are taking a little longer then they would have done pre-Covid. Strong application volumes, coupled with the need to focus on those who took a mortgage payment deferral is causing some capacity challenges, which is one of the reasons why the longevity of some products is so short.

“Looking ahead, the volume of consumers going from a payment deferral back to normal payments is encouraging. However, we are not in normal times and forecasts of rising unemployment, and the imminent end of Government support schemes mean that lenders are rightly focused on risk and affordability. Whilst very definitely open for business, responsible lending is the watchword as we navigate the next 6-12 months.”

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