The rebound since September is particularly marked by a substantial drop in the number of people who think now is a bad time to buy. Taken together, the Property Tracker index has bounced back from a 9% low in September 2014 to 23%.
Regardless of potential uncertainties such as the General Election, results show that optimism has returned to the market after the mid-2014 dip. This coincided with the introduction of new mortgage regulations and the announcement by the Financial Policy Committee of actions to limit lending in the housing market. Results now indicate that transaction volumes may begin to slowly pick up after cooling off late last year.
Despite average wages increasing and high levels of employment, raising a deposit is the greatest barrier to buying a home. Overall, 59% of those surveyed say that this is the biggest hurdle they have to overcome, up by three percentage points on December 2014.
The future prospect of a rise in the Bank Rate is an issue for many. Over one in ten borrowers say that they would be forced to miss a payment on a bill if interest rates rose by 1% over the year ahead. A further 12% said that making loan repayments would be a constant struggle.
Paul Broadhead, BSA Head of Mortgage Policysaid: “Optimism in the housing market is back after a long, slow winter. Conditions in the mortgage market and the wider economy are improving and this confidence is driving consumer sentiment – especially those looking to purchase a home.
Consumers and providers are also cheered by the fact that house building is starting to increase, household finances are less squeezed and inflation has fallen to 0%. Even if deflation happens - provided it is short lived and is not generated by a fall in demand in the economy - it should not be damaging.
The Financial Policy Committee will keep watching property prices and sales volumes carefully. It, saw the need to act last year and now has a range of new tools at its disposal. A more sustainable cure for the affordability challenge is increased housebuilding.
Earlier this month we asked for a revolution in the provision of new housing in our discussion document Housing at the Heart of Government. Like millions of others, we now await the outcome of the General Election to discover whether housing will sit at the top of the political agenda as promised.”
Mark Riddick, Chairman of Search Acumen, comments on latest BSA Property Tracker: “The return of optimism to the housing market is a welcome sign that we’ve waded through the seasonal slowdown and can expect another busy year in 2015. Today’s report from the BSA shows election year anxiety and fears of deflation have not put a dent in the British dream of homeownership.
The bounce up from a 9% low in September to 23% of people sensing now is a good time to buy property, is a great turning point but should not be a cause of hubris for political parties. We are still waiting on politicians to deliver an effective solution to the housing crisis and overcome the lack of affordable housing that is blighting Generation Rent.”
In the meantime, the upswing in buyer confidence suggests now is the opportune moment for conveyancers to brace themselves for a busy spring. Those firms with ambitions to grow should tilt their focus towards honing their internal systems and processes, so they are ready to handle large volumes of transactions and take advantage of the flourishing housing market.”
Paul Smith, CEO of haart, comments: “Particularly for first-time buyers the last two years have been full of very positive news, including Help to Buy, stamp duty reform, low mortgage rates and now 0% inflation and the prospect of a first-time buyer ISA. At our estimate first-time buyers are making a total saving of around £12,000 off the back of all this.
But it is important to emphasise that now is also a great time to sell and move up the property ladder. We anticipate that average property prices will bounce back up in the post-election period and although a home owner looking to move will see the value of their property rise between now and post-election, the value of their next home will also increase and if they are moving into a more expensive property the increment will be greater after May.”
