‘Confidence crunch’ keeping UK market stagnant

Published: Fri Aug 15 2008


A new HSBC study claims that the main reason for the continuing stagnancy in the UK housing market is that people are too wary about selling or buying in the current climate of uncertainty and speculation, rather than their inability to obtain a mortgage.

The study says that some 98% of potential buyers would be able to secure a mortgage but are holding off from doing so because they fear house prices will continue to fall – leaving them with a property worth less in six months’ time than what they paid – or they simply assume they will not be able to get a mortgage.

The bank says that as a spin-off from the effects of the credit crunch, and the tightening of lending conditions and mortgage approvals, Britons are experiencing a ‘confidence crunch’, with around 1 in 10 of all homeowners who are planning to move deciding to postpone for at least six months, in the hope that market conditions will improve. Of this group, 37% said their biggest concern was falling house prices, while 36% were worried about being able to afford a mortgage amid rising living costs.

HSBC’s UK head of mortgages Martijn van der Heijden said, "Almost one in four buyers think they might struggle to get a mortgage, however just one in fifty has actually given up on their purchase due to failing to find a suitable loan. Anyone keen to buy a home still has an extensive range of mortgage options."

First-time buyers in particular are avoiding entering the property market and account for nearly a quarter of those delaying a house purchase. The fact that so many potential buyers are delaying their purchase for six months or more spells more bad news for sellers, especially those eager to sell. "Vendors already suffering from the stagnant market conditions will see this as more bad news," said Lawrence Smith of Decision Homebuyers. "Making a quick and guaranteed sale to a property company might provide the best solution for those keen to sell soon or, for whatever reason, cannot afford to wait indefinitely."







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Email: phil@dhbuyers.co.uk
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