Press release

Consumer confidence in housing market falls

Consumer confidence in home purchase has dropped in September, with the BSA’s Property Tracker Index¹ at -4%, down on June’s figure of -1%.  The UK Public has now been net negative about the time being right to buy a new home, for 6 consecutive quarters.

Following the modest increase in the Bank Rate from 0.5% to 0.75% in August it is clear that the cost of monthly mortgage repayments is of increasing concern.  Overall, 48% of consumers saw this cost as a barrier to home ownership, up from 44% in June 2018.  The last time this number of consumers rated monthly repayments as a barrier was back in June 2014 (49%).

Commenting, Paul Broadhead, Head of Mortgage & Housing Policy at the BSA said:

“Consumer negativity on home purchase is borne out by a mortgage market which remains subdued.  The only area of mortgage lending which has seen any growth this year is the re-mortgage market.  This has been in part driven by borrowers looking to fix their mortgage rates as Bank Rate rises.   Now there is evidence that fixed rate periods are starting to rise with borrowers looking to secure their repayments before the Bank Rate rises again.

“Uncertainty about Brexit – deal or no deal – is dampening the volume of property purchases, with many of those who can delay doing so.  High house prices in some regions are still a huge issue, especially for first time buyers, and more than a third of consumers (36%) still believe that prices will rise in the next 12 months.  That should be set against 22% who believe that they will fall. 

Help to Buy: Equity Loan

“Whichever way prices go, raising the necessary deposit has not diminished as a material barrier to owning your own home – the majority of consumers (65%) say that it is the most significant barrier that they face². 

“Help to Buy: Equity Loan has been an important feature in the market for 5 years and has helped 170,000 buyers, both first time buyers and so-called second steppers.  Rumours that it is under review has caused some to demand that it becomes a permanent feature of the market and others for it to changed or be withdrawn.

“The fate of this scheme after 2021 was always going to be difficult, but in my view it should not become a permanent part of the market. Tapering it down could be one option. When Help to Buy (Scotland) was launched in 2013, it had a price cap of £400,000, this has been reduced £230,000 allowing more people to benefit from the available funding and targeting it at lower income families and first-time buyers. Another option could be to reduce the equity loan available from 20% to a lower amount.

“To sensibly manage the change, investors, lenders, developers, mortgage intermediaries and of course consumers, will all need time to adapt to a world without direct Government support. Now would be the time for the Government to make its intentions for the future of Help to Buy: Equity Loan crystal clear.”

 

Ends

Press contacts:

For further information or to interview Paul Broadhead please contact:

Hilary McVitty, Head of External Affairs Tel: 0207 520 5926 hilary.mcvitty@bsa.org.uk

Notes to Editors:

  • All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2,013 adults. Fieldwork was undertaken between 31st August and 3rd September 2018.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
  • ¹Survey recipients are asked whether they agree or disagree with the statement that now is a good time to buy a property in the UK.  The Property Tracker index is the net score of the two.  A negative score means that more people disagree with the statement, a positive score the reverse.
  • ² When asked to select the 3 factors most likely to stop someone buying, 65% of consumers say that it is the most significant barrier that people face
  • The full report can be viewed here.
  • The Building Societies Association (BSA) represents all UK building societies, which between them serve 23 million consumers. Societies have total assets of over £396 billion and, together with their subsidiaries, hold residential mortgages of over £312 billion, 23% of the total outstanding in the UK. They hold over £276 billion of retail deposits, accounting for 18% of all such deposits in the UK. Building societies account for 37% of all cash ISA balances. They employ approximately 40,000 full and part-time staff and operate through approximately 1,550 branches as well as other channels.