Public confidence in the housing market fell slightly in June compared to May, due mostly to the increase in contractor mortgage rates, according to propertyfinder.com’s June survey of confidence in the housing market.
53% of the 2,462 respondents thought house prices would increase by June 2010, with only a quarter (26%) predicting that prices would fall. One in five respondents believed there would be no change in house prices in a year’s time. The survey shows a slight dip on May when 60% believed house prices would rise in the next twelve months, but confidence still remains higher than at any stage since September 2007. Rising contractor mortgage rates caused anger among respondents. 57% said mortgage finance was too expensive and a further 51% felt lenders were not playing fair. Only 6% believed lenders were not to blame.
Housing transactions are stabilising and rising confidence is likely to improve the situation further. Mortgage approvals are a third higher than at the start of 2009 (a 34% increase in April from January), which bodes well for improving transaction levels in the coming months. There is currently a 79% correlation between Land Registry transactions and propertyfinder.com’s confidence monitor, indicating that those seeking to buy or sell a property will now be able to do so more quickly.
Overall, those surveyed predicted house prices will increase 0.6% by June 2010.
Nicholas Leeming, director of propertyfinder.com, said: “After rising to its highest level since the credit crunch began in May, housing market confidence dipped in June, as lenders’ decision to ramp up mortgage rates prompted a borrower backlash. There is real anger out there about the failure of lenders to offer mortgage borrowers the rock bottom interest rates the Bank of England has tried to bring about. There is cause for optimism that we are past the worst in the housing market, but the revival will be long and drawn out if lenders don’t change their ways. Home buyers are out of the blocks, but lenders seem determined to put extra hurdles in their path.”
The lack of supply of properties was seen as the main reason for likely house price growth, with 39% believing a shortage of homes for sale will drive up house prices. 31% of respondents thought the return of property investors to the market would be responsible for rising house prices. But, the availability of mortgage finance was not a cause for optimism, with only 7.7% of home buyers and sellers (and only 4% of first time buyers) believing contractor mortgages are affordable.
Leeming said: “The number of homes for sale has fallen 15% in the past six months, which has helped to stabilise house prices. Interest from buyers is also rising and has the potential to boost prices, but this will be left unfulfilled if mortgage finance remains so scarce. Expectations for house price growth in the next year are still very modest – proof that while the worst may be over, the housing market is still not out of the woods. Lenders should take heed.”
Buyer interest was strongest in London in June for a third consecutive month. Buyers made more enquiries per property to estate agents in the capital than any other region in June and the South East followed closely behind. Interest remained relatively low in the North East in June.
Leeming added: “Interest in property in London is once again higher than any other region. Activity is most likely to recover first in areas where interest in property is greatest and the capital, which often leads the national trend, is seeing the strongest uptick.”
