Good news and Bad news – Interesting Statistics Concerning the UK Property Market

Leading property website Rightmove has published a number of interesting statistics concerning the UK property market, which can be broken down into two key conclusions:

– The proportion of ‘price optimists’ (those who believe prices will rise over the next 12 months) is substantially up on last year.
– Almost a fifth of homeowners who bought in the last five years and believe their property has lost value are stuck in a negative equity trap.

Price optimism

Rightmove’s latest Consumer Confidence Survey of more than 33,000 home-movers found that the proportion of people who thought average house prices would be higher a year from now was at 29%, up 7% on a year ago. In addition, 41% thought prices will remain stable and many attributed the improved conditions to a steadily improving mortgage market. 32% believed the mortgage market would be better next year, up from 28% yesterday.

Improved confidence can be a significant contributor to the wider economy, boosting both private investment and consumption. The hope will be that improving confidence will stimulate demand and help perpetuate the excellent 1% growth we experienced in the last quarter. Without the Olympics to boost the figures, the UK will need significantly more natural economic activity in key industries like housing to maintain that level of progress through the next quarter.

Negative Equity

On the other hand, research by the same company has indicated that 17% of homeowners who purchased in the last five years and believe their home has lost value are stuck in a negative equity trap – ie. where their property is worth less than the size of their mortgage. This is up to 21% for those that purchased in 2007, at the peak of the market. In fact, 49% of those who purchased at this time believe their property has fallen in value.

In a market where equity is the driving force, the news of greater optimism over prices will no doubt be gratefully received by these families, whose ‘millstone’ will be lifted if prices rise above the liability of their mortgage loans.

Crucially, although there has been some media generated confusion on this point, this is not 17% of all homeowners, but just 17% of those with a property they perceive to have fallen in value (which does not mean they have had comparative independent valuations). The figures are the result of a subjective online questionnaire and are not, therefore, to be taken as writ.

As mentioned above, the survey in this instance was based only on subjective figures. If you are considering putting your property on the market, but are unsure of the real worth of your asset, contact an Independent Chartered Surveyor to conduct an accurate valuation. This can even be made retrospective, to ascertain what your property’s value would have been at the top of the market, and could be again.

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