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UK housing market confidence wanes

Confidence has waned over the second quarter of 2011 due to continued lending constraints and economic uncertainty. Despite the quarterly drop in confidence, homeowners are still more positive now than they were back in January when only 54% of homeowners believed prices would rise. However, these figures are still significantly below the peak in early 2010 when 81% of British homeowners expected property prices to rise.

The drop in confidence has also affected the amount by which homeowners believe house prices will rise over the coming six months. According to the 4,146 homeowners surveyed by Zoopola.co.uk, house prices are expected to rise by an average of 2.6% over the next six months, down from the 2.8% predicted three months ago.
The story in London and the South East is very different from the national trend with housing market confidence growing in these areas. In London, 74% of homeowners are expecting house prices to rise between now and the end of the year, up from 68% three months ago. And the average amount by which Londoner’s expect prices to grow has increased significantly to 6.2%, up from 2.7% last quarter. In the rest of the South East, 63% of homeowners are confident prices will rise compared to only 58% three months ago.

Contributing to the overall drop in confidence in the housing market are the continued tight lending conditions with nearly one third (32%) of homeowners surveyed saying that it is harder to get a mortgage now than three months ago, 55% claiming there has been no change to lending conditions and a mere 12% believing that obtaining mortgage finance was getting easier.
The largest drop in confidence over the last 3 months has been in Scotland where 58% of homeowners now expect house prices to rise over the next six months, down from 63% three months ago. In England 58% of owners expect house prices to rise down from 59% three months ago and in Wales 53% expect prices to climb, down from 54%.

Nicholas Leeming of Zoopla.co.uk, commented: “This slight dip in confidence is justified by the weakening economic outlook and continuing constraints in the lending market. These factors have caused activity in the property market to fall which has resulted in waning confidence. Aside from a more reassuring economic outlook, the key catalyst for increased property market activity and house prices will be down to lenders improving the availability of mortgage finance.”

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