Uncertainty surrounding the UK’s departure from the European Union (EU) has hit consumer confidence in the market and is currently perceived as a bigger risk than the rising cost of living and increasing interest rates.
A survey conducted by YouGov on behalf of the BSA, which represents the UK’s building societies, revealed confidence in the housing market had deteriorated as the year has progressed. In early December fewer people thought ‘now’ was a good time to buy a property than in September.
However, some said a correction in house prices might make them change their mind and reconsider their aversion to buy, as would a strong period of income growth and the UK Government reaching an agreement to leave the EU.
Paul Broadhead, head of mortgage policy at the BSA, said it was no surprise Brexit was a key factor in the subdued mortgage market, however he thought a resolution would improve the outlook.
“Dominant negative media coverage and the pessimistic forecasts will be affecting people’s views,” he said. “If we get some sort of clarity soon, this could cause a shift in sentiment.”
Deposit challenges
Aside from Brexit, it also emerged in the poll that raising a deposit remained the greatest barrier to home ownership, with 62% of people identifying it as a challenge.
Broadhead said increasing housing supply would be the key to conquering this hurdle. He said: “For decades, successive governments have failed to get a grip on the deficit in housing supply. This has led to house price increases far exceeding wage growth, particularly for the young.
“The current Government has bold plans, but bold actions are needed to narrow the gap between house prices and earnings.”
