Forex Market Commentaries - A Quick Look At The UK Housing Market

A Quick Look At The UK Housing Market

Mar 20 • Market Commentaries • 884 Views • Comments Off on A Quick Look At The UK Housing Market

The UK’s Building Societies Association (BSA) has noticed an improvement in consumer sentiment in their most recent housing data. Although the major concern for most UK residents are high unemployment and little to no job availability, it seems that people who were never concerned before are beginning to worry, with the ongoing austerity measures, and as business continue to cutback employees who were safe at their jobs or who have specialized skills, are beginning to stress.

In the past, these were valuable employees to an employer so turnover was low, but these employees also knew they are in demand in the job market, so they never worried. With ongoing cuts, this new group of UK citizens is no showing signs of stress, as they do not know how long they would have to hold out in this job market to find a replacement position, if anything were to happen. This overall effect is putting a damper on the entire economy.

In the most recent reports, many more consumers said that they expected property prices to rise in 2012, 41% of those surveyed compared to 33% at the end of last year. 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.

Regardless of these improvements it remains obvious that significant roadblocks are still in the way of future home owners and growth in this sector, not least rising fears over employment security. This was cited as a stumbling block by 56% of all respondents, up from 54% in December 2011. Of those surveyed, 17% said they were looking to buy property in the near future. This is made up of first-time buyers (6%), previous owners looking to move to another home (8%) and buy-to-let investors (3%).

The strongest intentions to buy are seen in Wales, where 23% of respondents said they were looking to buy, particularly first-time buyers (14%).  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.

 

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62% of those asked 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. It is possible that this may also reflect little or no equity in their current property for some. This group was 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.

Paul Brodhead, Director of Mortgage Policy at the (BSA) said:

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.

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. If the U.K can stimulate jobs, then there is a fairly good chance that the housing market will fall in line rather quickly. Most of the group surveyed, could and would buy if they had the job security they have been used to.

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