Homeowners expect price rises over next 5 years

Optimism has also waned in the longer-term, as homeowners currently expect property prices to grow by only 6.9% in the next 5 years, down from a predicted 10.6% a year ago.

If prices change as homeowners expect, they will increase by on average £4,000 by spring 2013 and £15,360 in 2016 according to latest figures from the LSL / Acadametrics house price index.

Gareth Samples, Managing Director of Your Move, said:

“Slowing house price growth has clearly taken its toll on homeowners’ confidence and, alongside the clear risks to the UK’s long-term economic health, this has made prices fall. But cash buyers and those able to obtain mortgage finance with large deposits are able to gets great value as a result. The strongest downward force on property prices is how hard it is to get a mortgage and while it may be some time before lenders loosen their purse-strings, homeowners know that once finance becomes more readily available, prices will recover.”

Homeowners expect the value of their homes to fall slightly in the next 12 months, Just 37% of homeowners expect house prices to rise in the next 12 months, compared to 75% this time last year. This increased pessimism is reflected in homeowners’ expectations for price changes. The typical homeowner expects prices to fall by 0.6% in the next 12 months, down from an expected rise of 0.7% in August 2010 and 2.8% in April 2010.

Although homebuyers were less optimistic about future house prices, many were unaware of how much their property’s value had increased. According to the survey, nearly a quarter of homeowners (23%) believed their home had decreased in value since they bought it.  The average homeowner has owned their house for just over 9 years and believes in that time their property has increase in value by 72%. If this increase had occurred, the average increase in value for homeowners would be £92,176 (between March 2002 and March 2011. But for the same period the average house price has actually risen by £102,890. This means homeowners may be underestimating the values of their homes by more than £10,000.

Gareth Samples continues: “If you take a long-term view of the property market, it’s easy to see what a good investment bricks and mortar has been in the last decade. Despite the downward pressure exerted by the recession and the drought in mortgage finance, prices have almost doubled in the last decade. Although it seems people don’t necessarily realise how much their property is worth. The average homeowner may be sitting on an asset worth £10,000 more than they think, which demonstrates just how good an investment property was at the beginning of this century.”

Mortgage lending has come more strongly into focus since August last year, as now three quarters (75%) of would-be buyers who say they are unable to purchase a home cite the availability of mortgage finance as the main reason, up from 70% last summer. However, the number of buyers complaining of an inability to muster an adequate deposit fell since August from 71% to 66%.

Gareth Samples concludes: “It would be rash to assume a static housing market means there aren’t enough willing buyers out there to push prices up. The current problem is that they’re willing and unable, because there isn’t much mortgage finance available. But the fact that prospective buyers are increasingly positive about their ability to put together a sufficiently large deposit means we could see an explosion of pent up demand when and if mortgage lending picks up.”

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5 thoughts on “Homeowners expect price rises over next 5 years

  1. Swervin Mervin

    Nobody knows what house prices will do in the longer term, but seeing as they have tripled in a decade, are mostly paid out of wages, and wages have only risen 50% in a decade, they will obviously plummet at some point in the next two years now the easy credit is gone.

  2. The Vindicator

    No1 Unless someone owns their home outright, they are NOT ‘home owners’!!
    No2 The article is pseudo-analytical drivel throughout

  3. Gavin

    Do any of the voters have a understanding of economics or is it all just wishful thinking? The later I presume.

    The fact is house prices are falling and are overvalued compared to today’s lending standards. the only way they can stop falling is wages increase dramatically or irresponsible lending returns. That is hardly likely especially as wages are already being frozen and set to be cut in the public sector. Wages are already being eaten away by inflation and interest rates are too rise. Where is this so called price growth coming from.

    If anything the poor economic climate will see rents fall as well especially as the housing benefit changes complete.

    I believe firmly that prices will be lower in 5 years time.

  4. David

    I think the headline should read ‘80% of homeowners HOPE that house prices will rise….’

    And the other 20% are living in the real world and realise that house prices are going to continue to fall and those falls will gather pace over the next few years. Asset classes move in cycles (including housing) and we’re struggling to overcome the biggest credit binge in history. there’s only noe way for house prices…and it’s not up!

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