In a recent survey carried out by the BSA (Building Societies Association) only one in seven people believe that now is a good time to buy a house.
A combination of high house prices, rising mortgage rates, increases in the cost of living, and political turmoil is having a profound effect on the housing market, as confidence in the housing market dips to a record low.
Of all the people surveyed by the BSA, it was reported that just 14% of all people believe that now is a good time to buy a new home, compared to 47% who think it isn’t a good time. This gave the overall net rating of the survey a -33%, one of the lowest levels of confidence that has been seen within our housing market since the measurement began almost 15 years ago.
So is now a good time to buy a new home?
This depends on where you are in the country, in some parts people are biding their time whilst others are biting the bullet and are getting stuck into the property market without a concern. This is backed up by the survey results which showed that 19% of people in London agree now is the right time to buy a property compared to around half that figure in Yorkshire and the Humber and the North East (10%).
Some property owners believe that house prices will dip within the next 12 months. This figure saw an increase to 49% this month compared to only 16% saying that house prices will rise.
That said only one in ten people or 9% of the survey were worried that the value of their home could fall in the next 12 months.
The effects of high-interest rates
In order to combat inflation, as we have seen already this month, the Bank of England has had to increase interest rates. This has had a knock-on effect on mortgage repayments which is now considered to be one of the biggest obstacles to buying a new property.
66% of all survey respondents highlighted this as one of the biggest barriers with over half saying concerns about rising deposit was also blocking them. Access to a large enough mortgage was another barrier.
Homeowners vs Renters
When the question of what were people worried about over the next 6 months, the survey revealed that almost 70% of all people were concerned about the rising energy costs and the costs of food with Homeowners being the biggest group to have these concerns.
Whilst this may sound daunting it is surprising that 87% of all people asked were not concerned about keeping up with their mortgage payments. Renters, however, are less confident, with around 23% expressing concern about meeting their housing costs.
Head of Mortgage and Housing Policy at BSA, Paul Broadhead said:
Whilst several house price measures are now showing modest price falls, the significant increases over the last two years, alongside the spiralling cost of food, fuel and energy, means mortgage affordability for those wishing to buy a property is likely to be more difficult now than it was 12 months ago. I expect this, and raising a deposit, will remain key barriers to homeownership for some time to come, with many potentially having to lower their ambitions on the property they can consider buying.
It’s encouraging that almost nine in ten homeowners are not expressing concern about keeping up with their mortgage repayments, and we’ve not yet seen any increase in borrowers with mortgage arrears. This is likely to be because around 80% are on fixed rates meaning it will take time for higher mortgage costs to be felt by many. This will not be the case for renters and therefore it’s not surprising that they are less confident about meeting their housing costs.
Whilst the indicators suggest low confidence in the housing market, there is not ‘one market’ and the impacts will be felt differently depending on individual’s circumstances, whether they are regional or personal. In general, there still remains an imbalance between the supply and demand for properties across most areas of the UK, which I expect will keep the market moving, albeit at a slower pace than we’ve seen recently.
Finally, it’s worth noting that lenders are sensitive to the rising number of people facing a squeezed household budget and have teams who are well trained and experienced in providing tailored support to those who are struggling. Anyone who is worried about their finances and ability to pay their mortgage should therefore get in touch with their lender or a debt adviser as soon as possible. They will provide a safe space for a confidential, non-judgmental chat and will do everything possible to help each borrower with options based on their own personal circumstances.
