Two in five UK home-movers forecast that average UK house prices will remain around the same level in 12 months’ time. This is the fifth consecutive quarterly rise in those expressing this view and, at 38%, is the highest level Rightmove has ever recorded.
Miles Shipside, director of Rightmove comments:
“There is clearly a growing trend towards consumers believing prices will be more or less the same in 12 months’ time, with around 4 in 10 people now of that view. In spite of 2010 being something of a roller-coaster ride for the property market, asking prices ended the year broadly flat.
"Prices rose consistently throughout the first half of the year though we measured some big falls in five of the final six months. This left asking prices just 0.4% up year-on-year and it is perhaps this levelling out effect which has encouraged a growing proportion of the public that we are set for an element of house price stability in 2011.
"However, we don’t yet know what the twists and turns of interest rates and repossessions may bring this year, and so it will very be interesting to see how home-movers’ confidence is affected if the 2011 housing market doesn’t turn out to be an easy ride.”
While the ‘no change’ bandwagon has gathered pace, the proportion of ‘price optimists’ who believe that prices will be higher in 12 months’ time now stands at around one in four (24%).
This is in sharp contrast to the same Rightmove survey for the first quarter of 2010, which found that more than half (53%) expected house prices to be higher in a year’s time. The proportion of ‘price optimists’ has fallen for each of the last five quarters to the lowest level for two years.
In contrast, the proportion of ‘price pessimists’, those who believe prices will be lower in one year’s time, has risen over the last year. However, though this group has grown from 13% in Q1 2010, its current level of 32% has remained static this quarter.
What are the reasons behind the public’s house price views?
Rightmove’s Consumer Confidence Survey found that the main reasons given for thinking prices will be lower in 12 months’ time were a lack of confidence in the economy (53%) and an increase in available property (30%). The shortage of mortgage availability was the view of around only 1 in 10 (11%).
Conversely, among those forecasting higher prices, the growth of mortgage availability scored much higher as a trigger for growth in prices with 25% stating it as their main reason. However, the majority of price optimists based their views on an increase in confidence in the economy generally, with 55% citing this as their main reason.
Shipside comments:
“A lot hangs on economic recovery, and in the view of thousands of respondents, price rises or falls in the housing market depend on the health of the economy too.
"An improvement in mortgage finance will help drive a recovery according to a significant number, but the over-supply of property is the most substantial property related factor that will push prices down in the opinion of those in the ‘price-pessimist’ camp”.
Despite the uncertainty around the immediate future for house prices, 60% of respondents to the Rightmove Consumer Confidence Survey stated that they believe it is ‘currently a good time to buy’. This, supported by Rightmove setting an all-time record for website traffic this January, provides a strong indication of pent-up buyer demand.
Shipside adds:
“We have an obsession with house-prices in this country, but it’s worth remembering that when people make the decision to buy, the equation is far more complex for most than simply placing a bet on short-term price trends.
"For many, the relatively low cost of borrowing money means it really is a good time to buy, though the shortage of available property in some popular locations, and demanding criteria set by lenders, mean that it is not necessarily an easy time to buy.”
