UK residential has become ‘buyers market’

After 2008 saw 16.6 percent wiped off the value of UK houses, there are signs that confidence is returning to the residential sector with respondents to a recent survey saying they view it as a time to buy.

Consumer confidence is returning to the UK residential property sector, says a report out today, while another report suggest house prices crept up 1.9 percent in the past month.

According to the Rightmove Consumer Confidence Survey, published today, two-thirds of its 28,000 respondents believed the UK has become a buyers market. Meanwhile, the Halifax House Price Index recorded an increase in the value of the average house of 1.9 percent. This meant the average UK house was worth £163,966 ($239,739; €187,400).

Nearly half of those surveyed by Rightmove intended to buy in the next 12 months with seven out of 10 respondents predicted further house price falls in 2009. According to Nationwide Building Society, house prices in the UK fell by 16.6 percent in 2008.

Consumer optimism seeped into 2010 also, with only one in four respondents expecting the start of the year to be a worse time to sell a property than now.

In London, 59 percent thought it was a good time to buy, 19 percent felt it was a good time to sell, suggesting prices may fall further.

Miles Shipside, commercial director at Rightmove said: “With interest rates at historic lows and set to fall further, and property deals available at around 25 percent below peak boom prices, buying has got a whole lot cheaper.”

“Other assets now seem a lot less solid than bricks and mortar, so the time to buy pendulum is swinging from negative to positive. It’s aided by some homeowners’ mortgage repayments being made the lowest they have ever experienced and the prospect of them getting even cheaper – a real turn around from just a few months ago.”

The survey was released as mortgage lender Halifax said it recorded a 1.9 percent increase in the average UK house price in January. Martin Ellis, housing analyst at Halifax said: “There was a 1.9 percent increase in average UK house prices in January, offsetting December's 1.6 percent decline. Prices in the three months to January compared to the preceding three months, which provides a better indicator of the underlying trend, were 5.1 percent lower.

But despite the rise, Ellis warned: “It is always important not to place too much weight on any one month's figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn.  For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.

There are some very early signs that market activity may be stabilising, albeit at quite a low level. Nonetheless, continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to mean that 2009 will be a difficult year for the (UK) housing market.”