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UK buyers and sellers are more upbeat about the outlook for the property market but this is offset by rising fears over job security, according to the latest quarterly survey by the Building Societies Association.
In March, significantly more consumers said that they expect property prices to rise in 2012, 41% of those surveyed compared to 33% in December 2011.
Across the UK, consumers in the South East are the most bullish with 53% forecasting that property prices will go up and 14% saying that they will fall. Those in Wales are the least optimistic on price with 30% expecting an increase, 29% a fall and 22% no change.
The number of consumers who report that now is a good time to buy is also holding remarkably firm, on a par with the December 2011 figure of 44%. This is better than this time last year when 41% of those surveyed thought market conditions were favourable for purchase.
Despite these improvements it remains clear that significant barriers are still in the way of aspiring home owners and growth in this sector, not least rising fears over job security. This was cited as a barrier by 56% of all respondents, up from 54% in December 2011. This concern was most acutely felt amongst women and among 45 to 54 year olds of both genders.
The number of people who saw stamp duty as a barrier also rose, up from 10% to 12% between December 2011 and March 2012. The BSA says this may be a reflection of the psychological impact of the termination of the first time buyer stamp duty holiday at the end of this month.
Of all respondents, 17% said that they were looking to buy property in the near future. This is made up of 6% first time buyers, 8% previous owners looking to move to another home and 3% buy to let investors.
The strongest intentions to buy are seen in Wales, where 23% of respondents said they were looking to buy, of which 14% were first time buyers. In London 22% of respondents intend to buy. By contrast, the lowest intentions to buy were recorded in the West Midlands and the East of England with just 13% saying they intended to purchase property in the near future.
Describing their intentions, 17% of the under 35’s surveyed said that they were looking to buy their first home.
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Over six in ten of those surveyed said that they already owned their own home. Of these 84% said that they had no intention of moving in the near future. There are indications that a proportion of this group will not be moving as they currently face significant barriers obtaining a new mortgage or raising a deposit.
The BSA says it is possible that this may also reflect little or no equity in their current property for some. This group were particularly concerned about job security, with 62% of citing this as a barrier, compared to 44% of owners who were looking to buy property sometime soon.
‘The majority of home purchases are made because a consumer wants rather than needs to move house. This means that consumer sentiment is a useful leading indicator of future sales activity in the housing market,’ said Paul Broadhead, head of mortgage policy at the BSA.
‘It is good to see some positive indicators, price change or an expectation of price change can stimulate activity although inevitably it isn’t good news for all. Some commentators are waiting for the market to return to normal, I am not one of them. After all exactly what is normal? If you look back through the last few decades it has been a number of different things,’ he explained.
‘I believe that both consumers and lenders are currently in a period of adjustment to a new normal. A market that will be characterised by broadly flat or slow price increases; one where transaction volumes are lower than over the past ten years; where saving to buy becomes commonplace and a proportion of the population prefers to rent. It’s wrong to assume that everyone who is renting is doing it because they have to,’ he added.
He also pointed out that having a mixture of quality housing with a mix of tenures is a healthy position for the UK and it leads to vibrant and inclusive communities. ‘Building societies and other mutual lenders are doing their bit with some increasing lending generally in 2012, a rise in the number of higher loan to value ratio mortgages for first time buyers plus participation in buy to let and alternatives such as shared ownership and self build. It will be interesting to see whether the government’s NewBuy Guarantee will stimulate house building. I hope it does, we need more homes,’ he said.
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