Home owners optimistic about house prices

Home owners optimistic about house prices

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Video transcript

It seems that despite the majority of people believing an interest rate rise is on the horizon, most of us are confident that house prices will continue to go up.

That`s the prediction from Halifax, which says recent discussions over the possible timing of an interest rate hike has seen a rise in the number of people who expect both mortgage and savings rates to be higher a year from now.

Usually, higher rates should make buying a house less appealing as it costs more to take out a mortgage.

But at the moment Halifax insists that more expensive mortgages won`t have the expected effect on the housing market.

In fact the lender says two thirds of us believe average property prices will be higher in 12 months` time, while just one in 20 of us think they will fall.

That`s bad news for first time buyers, who continue to face problems getting their feet on the housing ladder.

According to Halifax, raising a deposit is the number one barrier to buying property despite the availability of higher loan to value mortgages and the Help to Buy Scheme.

With rates also rising, it could be a perfect storm for first time buyer affordability.

Halifax mortgage director Craig McKinlay says a lack of second hand properties for sale on the market and the availability of low mortgage rates is currently putting upward pressure on prices.

And he says that `without an increase in supply it`s likely to mean that house price growth continues to be robust in the short term, even if interest rates eventually begin to increase`.

Halifax`s figures, however, suggest the chances of supply meeting demand any time soon are not high. 

The lender says the proportion of homeowners who believe the next 12 months will be a good time to sell has fallen seven percentage points to 52 per cent.

That`s the lowest level of positive selling sentiment in a year, and a sign that sellers are taking a cautious approach as they wait to see if and when rates do rise. 


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