Consumers are unsurprisingly concerned that stability in the housing market could be affected next year by increased living costs and rising interest rates, the latest Property Tracker survey results revealed by the Building Societies Association (BSA). The Post-Referendum bounce-back in confidence has been short-lived, with fewer consumers viewing now as a good time to buy property than three months ago.
The survey, conducted by YouGov on behalf of the BSA, found that people are equally concerned that an increase in the cost of living (38%) or a rise in interest rates (38%) could adversely affect the housing market next year.
The results demonstrate that households are sensitive to any increase in costs, whether that is a rise in the cost of borrowing or the general cost of living. This may be surprising given the current low interest rate environment, with Bank Rate cut to 0.25% in August this year, but consumers fear rising costs will leave them worse off in 2017.
In pre-Referendum June, 28% of consumers agreed that it was a good time to buy a property while 27% disagreed. September saw some return of confidence, with 31% agreeing it was a good time to buy versus just 21% disagreeing. However, in the most recent survey the proportion agreeing had reduced to 27% while 22% disagreed.
Commenting on the results, Andrew Gall, Chief Economist at the BSA said “The Property Tracker gives a valuable insight into consumer sentiment for the year ahead. While over a quarter believe it is still a good time to buy property, some have concerns about the stability of the housing market next year linked to the rising cost of living and borrowing costs. Inflation is expected to pick up in 2017 whilst wage growth remains weak, so these concerns are not misplaced. However, mortgage rates are currently at all-time lows, enabling many borrowers to benefit from historically low repayments. Fixed rate products also give certainty over repayments for a set time.
“There is a great deal of uncertainty around the strength of the UK economy since the vote to leave the European Union, and this is reflected in the Property Tracker results. Potential house-buyers will understandably want to have as clear an idea as possible of the impact on their finances before making significant decisions.”
View the full December BSA Property Tracker report here.