UK home-movers confident of price recovery by 2011

AugustThe latest Rightmove Consumer Confidence Survey finds that the proportion of people that expect prices to be higher one year from now has dropped from 50% to 41% since last quarter. This view, taken from more than 20,000 prospective home-movers, comes against a backdrop of Rightmove reporting new sellers’ average asking prices falling month-on-month for the first time this year. Despite a combination of factors exerting downward pressure on prices during the second half of 2010, overall a bullish majority of 75% believe that prices will either be the same as now or higher by July 2011. This has fallen back from the 83% recorded in our April survey, however.


The results are taken from responses to our regular quarterly question – “Where do you think average house prices will be one year from now?” – providing a first major insight into the property market outlook of potential home-movers since the change in government and announcement of austerity measures.


Miles Shipside, commercial director of Rightmove, comments: “A 9% drop in people expecting prices to be higher in a years’ time is a significant shift. However, three-quarters of people still believe that prices will either be the same or higher in 12 months’ time, indicating expectations of price stability in the medium-term. This suggests that either the Government cuts have not yet bitten hard enough to knock the inherent belief in property as a long-term safe-bet, or that there is a strong sense that the property market’s ‘dark days’ are behind us”.


Overall the survey indicates a degree of confidence that the new Government’s austerity measures will be bearing fruit in a years’ time. The medium-term view of the majority of respondents appears to be that by next summer the immediate concerns of property oversupply, mortgage famine, and the personal financial pain of the recovery process, will have eased. However, one in five believe prices will fall over the next year, and this ‘nervy minority’ has increased from one in eight last quarter.


Shipside adds: “The ‘price-optimists’ still out-number the ‘price-nervy’ by two to one, but with austerity measures starting to bite, a growing nervousness is to be expected. Given that house prices are anticipated to fall in the second half of 2010, it is reassuring that a bullish 75% believe that house prices will recover to be the same or higher by the summer of 2011. This is largely dependent on the return of mortgage availability which, unfortunately for frustrated would-be home-movers, may prove to be a longer game than they anticipate”.


Confidence levels across each region appear broadly similar this quarter. Respondents in East Anglia, where new sellers’ average asking prices are currently -1.4% year-on-year, are the most confident of higher prices (45.3%). Scotland, East Midlands and the South East also showed higher confidence levels than the rest of the UK. For the second successive quarter London sees the greatest proportion forecasting lower prices (23.3%).


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