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Tue, 26 January 2021

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Housing market sentiment falls, particularly in the devolved nations

Building Societies Association

3 min read Partner content

The latest Property Tracker survey from the Building Societies Association, reveals that consumer confidence in the housing market has slipped back after a rise following the announcement of a Stamp Duty holiday and Covid-related demand.

Job insecurity looks to be the main reason for this with over two thirds of those surveyed saying a rise in unemployment is one of the biggest potential risks to the stability of the property market in 2021. However, despite concerns that unemployment is likely to rise, more than 9 in 10 of mortgage borrowers feel confident that they’ll be able to make their own mortgage payments in the next six months.

Key Results

A decline in consumers who think now is a good time to buy a property, particularly in Wales and Scotland

Job insecurity is seen as the biggest barrier to property purchase, with those in the East Midlands and Scotland being the most concerned about this

Households remain confident in their own financial situation

North / South divide on house price expectations

The latest Property Tracker results show that just over a quarter (27%) of consumers think now is a good time to buy a property, down from 37% in September. The devolved nations are the least optimistic, with less than a quarter of consumers in Scotland (22%) and Wales (23%) feeling that now is a good time to buy. This suggests the boost in property sales caused by the Stamp Duty holiday may be short lived.  

Lack of job security (65%) is seen as the main barrier to someone buying a property at the moment. Across the regions, this is most keenly felt in the East Midlands (70%) and Scotland (69%) and less so in Wales (58%) and the South West (59%). Despite this recognition that unemployment will rise, 91% of mortgage borrowers are confident in their own ability to make their monthly payments, suggesting that most people don’t think it will happen to them.

When asked about house prices, there’s a clear North/South divide. Those in the South and Midlands are more confident that prices will rise over the next 12 months, with 27% in the South and 30% in the Midlands saying they think this will be the case. This compares to 23% in the North and 20% in the East of England. The exception to this geographical divide is London, where only 23% expect house price rises, possibly reflecting reports that homeworking is driving more people to look for property in less urban areas. 

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

“Whilst confidence in buying a property has declined, the market is still dealing with the demand created by the Stamp Duty holiday and the capacity constraints in completing the surveys, valuations and searches in a Covid-secure way before the 31 March deadline.

“To help alleviate this we have proposed a tapered end to the Stamp Duty holiday to government, where those who have accepted a mortgage offer by 31 March are given an extra three months to complete the purchase, whilst still benefiting from the tax reduction. 

“Continuing with the proposed cliff edge end could potentially have a damaging impact on the property market, particularly if those whose sale doesn’t complete within the deadline walk away from the transaction.

“Looking ahead, there are significant concerns around job security and whilst households currently remain confident in their own personal finances, lenders will continue to support those who face payment difficulties, including accepting requests for mortgage payment deferrals up to 31 March 2021.”

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