Confidence in the UK Housing Market Continues to Fall

By: Boris_Dzhingarov

According to a recent survey conducted by Halifax bank, 20% of people believe that house prices will drop in the coming year.  This is despite inflation continuing to rise and interest rates increasing.  Experts believe that this could be disastrous to the health of the British economy, especially with weak wage growth leading to British households feeling under pressure.

Young People the Least Optimistic

The survey found that young people, under the age of 25 are the least optimistic in the UK housing market.  This is not surprising as the majority are not yet on the housing ladder, and many are in entry level jobs that do not enable them to save the deposit they need to obtain a mortgage.  Those living in London were also not optimistic, with properties in the capital being out of the reach of most people without a high paid job.

Those aged over 65 were the most positive about the housing market, however many of those in this age group already own property and have paid off their mortgage.  Those living in Wales and the West Midlands also felt quite positive about the market, believing that now would be a good time to find a house to buy.  This has even led to the creation of websites like House Buy Fast where homeowners can quickly sell their properties for cash and buy before the market strengthens.

Mortgage Rates and Deposits the Biggest Worries

The Bank of England has held off on increasing interest rates for the past decade, however it is believed that rates will increase as early as next week.  As interest rates rise, the cost of borrowing becomes more expensive, and many young people are unwilling to get into more debt that they are unable to repay.

In addition to this, many young people are unable to get together the deposit required in order to purchase a house in the first place.  The Help to Buy scheme was introduced to make this easier, however home ownership is still impossible for thousands of young people across the country.  According to the Halifax survey of 2000 adults, over 60% of people saw the deposit required as the main barrier to home ownership, while 15% were worried about the increasing interest rates and the availability of affordable mortgages.

Other Worries

Another worry of home seekers is the sustainability of jobs.  Although the UK is currently enjoying its lowest levels of unemployment since the mid 1970’s, many people lived through the latest recession and are wary of purchasing a house if there is a risk they may lose their job.  This has, however, led to many turning to freelance work where, surprisingly, job sustainability is more likely.
Although many believe that the housing market will slow down as we enter into 2018, it will be interesting to see whether this happens.  Currently, it is clear that the government needs to introduce more schemes to build confidence in young people and help them enter onto the housing ladder.

By Boris Dzhingarov

© 2017 Copyright Boris Dzhingarov - All Rights Reserved
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