Confidence in UK housing market cooled in November

Fewer households across the UK think that the value of their home increased in November compared to last month, according to the latest House Price Sentiment Tracker from Halifax.

The survey, conducted in partnership with IHS Markit, found that just 14% of those asked in November felt the value of their home rose over the last month, compared to 17% in both September and October. However, this does remain significantly above the low of 4% recorded during the first national lockdown in May.

The resulting House Price Sentiment Tracker – a single figure indicator of perceived changes in house prices, where any figure above 50.0 indicates that people believe prices are increasing and any figure below 50.0 that they are decreasing – fell in November, from 52.4 to 51.6, registering just above the neutral threshold for the third month running.

Outlook for house prices

More people think their house will be worth more in 12 months’ time than those who think it will be worth less.

Just over a quarter (27%) of households believe the value of their home will have increased by this time next year, compared to just 16% back in May.

One in five people (18%) now think the value of their property will be lower in 12 months’ time, down from a peak of around one third (34%) of respondents in May. 

The resulting Tracker figure for people’s views on future house prices registered above 50.0 for the fourth successive month, at 54.8, having recovered nearly 14 points from May’s low.

Russell Galley, Halifax Managing Director, said: 

“UK households remain broadly confident in the strength of the property market. The perceived rate of house price growth weakened slightly during November but is nonetheless above average and a noticeable reversal from the period of negative sentiment we saw between April through to August.

“People also remain cautiously optimistic that property prices across the country will be higher in 12 months’ time. However, expectations softened from October, and remain subdued by historical standards. This is unlikely to change significantly while the macroeconomic landscape remains uncertain, with most housing market experts predicting greater downward pressure on house prices as we move into 2021.”

Barriers to buying a home

The survey also asked those respondents who are renting, but do not plan to purchase a property in the next two years, to select what factors were holding back their purchases. Of those respondents, two-thirds (67%) noted that a lack of savings was holding them back from buying. Other common factors included not earning enough (55%) and a poor credit score (26%).

Future housing market activity

Amid the ongoing economic uncertainty, around 8% of UK households said they planned to buy a property within the next year. Around one in seven households surveyed (13%) expect to purchase a home within two to five years, with a further 14% planning to purchase within the next five to 10 years.

On a regional basis, one in 10 households in London and the South East (both 11%), are planning a property purchase in the next 12 months. At the other end of the scale is Scotland where just 2% of households surveyed expect to make a property purchase in the coming year.

People aged between 25 and 34 are the most likely to be considering buying a home in the near term, with 13% of respondents saying they plan to purchase in the next year. This compares with just 6% of those aged between 18 and 24 and an even smaller proportion of those aged 55-64 (3%).
Regional confidence.

In seven of the 11 monitored regions people felt that property prices rose on the previous month, with the sharpest increase signalled in Yorkshire & Humberside, followed by the South West of England.

Elsewhere, households in the East of England, Wales, London and the North East of England, felt that the value of their home had fallen, with the rate of decline sharpest in the North East.

Regional disparity was also evident with regard to future prices; households in the South West of England were most confident of higher property prices in the next year, while in the North East of England sentiment turned negative for the first time since August, albeit only slightly.