Confidence 'growing' in UK housing market - research » Housing » 24dash.com

Confidence in the housing market is increasing with nearly half of people expecting prices to rise during the coming year, research showed today.

Around 49% of people think property values will increase in the coming 12 months, while 12% think they will stay the same, according to the Building Societies Association.

But people are not expecting strong gains, predicting that prices will edge ahead by only 1.4% during the period, although this is a significant improvement from predictions of falls of 6.1% when the same research was conducted in March.

The survey also found that 59% of people think now is a good time to buy a property, up from 54% in March.

Only one in five people now think it is a bad time to purchase a home, while 27% of those questioned are still expecting further price falls, down from 65% in March.

The rise in confidence follows a run of positive data on the housing market in recent weeks, with both Nationwide and Halifax reporting house price rises during May.

Estate agents have also reported a continued pick up in interest as potential buyers are tempted back to the market by recent house price falls and record low interest rates.

But the BSA warned that unemployment levels and the supply of mortgages would be key to any housing market recovery.

Six out of 10 people said concerns about job security were the biggest barrier preventing them from buying a home, unchanged from March.

A further 55% said they did not think they would be able to get the mortgage they needed, while 52% were worried that they did not have a big enough deposit.

But the number of people worried that they would not be able to afford their monthly mortgage repayments has fallen dramatically since the Bank of England began to cut the base rate aggressively, dropping to just 33% now, compared with 70% a year ago when the base rate was 5%.

Only 22% of people claim they would hold off buying a property because they are worried its price will fall, down from 51% in September.

Paul Broadhead, head of mortgage policy at the BSA, said: "There have been a number of encouraging signs that the worst of the property crash has passed recently and the Property Tracker shows that people think both that property prices will now rise and that now is a good time to buy.

"However, improving job security will be key to any substantial recovery of the housing market."

Meanwhile, figures from mortgage broker John Charcol showed that the recent pick up in buyer interest is beginning to translate into sales.

The group said it arranged more mortgages for people buying a property than those remortgaging during May for the first time since 2007.

Around 53% of mortgages arranged by the group during the month were for house purchase, up from an average of just 25% during 2008.

The number of mortgage inquiries relating to house purchase also rose to account for 60% of the total during May, up from 49% in April.

Ray Boulger, senior technical manager at John Charcol, said: "This suggests that as these inquiries translate into actual business the proportion of purchases in our business written will continue to rise over the next few months. It seems that the market is continuing to show positive signs of recovery."

YouGov questioned 2,242 people during June for the BSA.