Housing market fears grow as prices take a dipComments Off on Housing market fears grow as prices take a dip
SLIDING consumer confidence is casting a shadow over house prices, Halifax warned today.
The lender’s latest house price index showed a much sharper-than-expected 0.8% fall in average UK prices in April, which experts partly put down to the race to beat Chancellor George Osborne’s introduction of a 3% surcharge on stamp duty for second homes.
That takes the annual growth in property prices to 9.2% — the lowest since last autumn.
But Halifax’s housing market confidence tracker is also at its lowest level for more than a year “as consumers feel increasingly uncertain about the wider economy”, the lender said.
“Weakening sentiment regarding house price prospects and a dip in consumer confidence… suggest that annual house price growth may ease,” Halifax housing economist Martin Ellis said.
The latest data follow a run of worrying signs including a slowing jobs market and a clutch of recent industry surveys, which suggested that the economy slowed to a virtual standstill in April.
Businesses also cited the looming EU referendum next month for a reluctance to commit themselves to major spending plans. At the same time, research firm GfK saw consumer confidence fall to 15-month lows in its latest snapshot for April.
The Bank of England will present its latest inflation report on Thursday amid expectations that its growth forecasts will be pared back.
Governor Mark Carney — reportedly ready to cut interest rates in the event of a vote for Brexit — is also likely to acknowledge the impact of the uncertainty in the short-term.
Experts acknowledged that cheap mortgage finance and a lack of properties would largely prop up prices but admitted that the vote was hitting sentiment among would-be buyers.
Dragonfly Property Finance managing director Mark Posniak said: “People are starting to understand the magnitude of the Brexit vote and that will lead many to batten down the hatches.”
IHS Global Insight’s Howard Archer added: “We expect housing market activity to regain limited momentum in the second half of this year on the assumption that a vote to stay in the EU reduces uncertainty.”
Latest polling from the Institute of Directors today showed business leaders moving into the Remain camp as the vote nears. Its survey of 1224 members showed 63% want to stay in versus 29% for leaving. In February, the split was 60% to 31%.