Consumer confidence in housing prices drops to its lowest level since June 2013, according to the Halifax Housing Market Confidence Tracker.
The data shows that three in five consumers, or 60 per cent, had higher expectations for home prices in January. The index fell to 52 from 62 in December, to its lowest level in 18 months.
According to Halifax House Price Index the average price in January increased by 2 per cent to £193,130 as lending started the New Year at a slower pace.
The decline in confidence comes despite the recorded economic growth of 2.6 per cent last year and unanimous vote of all members of the Monetary Policy Committee to hold interest rates at 0.5 per cent.
For comparison, in June 2013 inflation was considerably higher at 2.9 per cent than currently (0.3 per cent), employment was a bit lower at 30 million, as compared to 30.9 million now, and lending levels were also lower, at £15 billion, as opposed to £17 billion at present.
Halifax explains the decrease in confidence with the lower optimism about the UK economy in general.
Craig McKinlay, mortgages director at Halifax comments:
“More than half of consumers still believe house prices will be higher than they are now in a year’s time; however optimism has continued to weaken. Despite this the fundamentals remain in place and we’re now seeing a return to the seasonal trend for house price activity. Traditionally, a slow start builds to the summer before another lull and then a further period of increase followed by a gradual easing at the end of the year.
“Of more concern are the figures from the DCLG showing a slowdown in the number of new homes being built. It’s widely acknowledged that the UK needs an increase in the amount of new housing being built. The Lloyds Banking Group Commission on Housing targeted 2 to 2.5 million new homes built by 2025 new homes to be built before 2025. If we are to address demand the increase in new homes coming onto the market needs to be sustainable.”
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