Home owner confidence falls away over summer

The number of home owners expecting property prices to fall has increased over the summer, says Your Move.

Just under a quarter of homeowners now expect house prices to fall in the next 12 months but they are still outnumbered by 50% expecting a rise over the coming year.

It is a huge increase from the 4% predicting falls three months ago

The typical homeowner, surveyed by Your Move forecasts, predicting prices to rise by 0.7% in the next 12 months, a decrease from predictions of a 2.8% increase in Q1 2010.

Three quarters of homeowners still believe house prices will resume their long-term rise over the next two years.

But homeowners now forecast more modest price rises of 3.2% in the next two years, a drop from the prediction of 5.4% three months ago.

In the next five years, they anticipate a rise of 7.3%, down from 10.6% three months ago. 

These predicted rises are equivalent to increases of £7,062 and £16,110 respectively on the average house price, according to latest figures from the LSL / Acadametrics house price index.

David Newnes, estate agency managing director of LSL, says: “In the face of a news onslaught about faltering house prices and a stalling recovery, confidence in the housing market has taken a knock. As a result, consumers have become more cautious on the market direction and more realistic on house price inflation in the next couple of years.

“A sustained rise in the market depends fundamentally on the increased supply of credit. With little sign of that happening, home buyers are justified not to expect blistering short-term gains.”

Although home buyers were less optimistic about future house prices, many were unaware of how much their property’s value had increased.

The survey shows 89% of homeowners believe their property has grown in value since they bought it.

Newnes says  property has proved to be a sound long-term investment despite the upset caused by the recession.

A total of 46% of those looking to buy say that buying is cheaper than renting – an increase from 25% in the last quarterly survey.

But mortgage finance is still the main deterrent for house purchase.

Of those who did not want to buy a home, 71% cited that they could not afford to save the required deposit, while 70% stated that they can’t get a mortgage. 

Newnes adds: “Mortgage finance has slightly eased lately, but it is still putting the brakes on potential market activity. Thousands would jump at the chance of buying their own place while prices are affordable.

“Until mortgages become achievable for more first-time buyers, we will continue to see just a fraction of would-be buyers fulfil their dream of home ownership. But lending conditions are set to be adverse for the next couple of years, and we don’t expect substantial or prolonged improvement in lending in the short-term.”