Growing confidence in housing market
Nine in ten home owners expect house prices to rise in the coming months as market confidence surges to its highest level in at least four years, research has found.
The study was released yesterday as Chancellor George Osborne claimed Britain was "on the path to prosperity" as official figures showed the economy grew at its fastest pace in three years in the third quarter.
The 0.8% upturn in gross domestic product (GDP) was the best performance since the second quarter of 2010, including a 2.5% surge in the construction sector – which has been bolstered by Government initiatives such as Help to Buy. It is also the first time in three years that growth has improved for three quarters in succession, figures from the Office for National Statistics showed.
However, the size of the economy remains 2.5% off the pre-recession peak of early 2008 and there were warnings that the pace of growth could start to tail off. Economists fear a continued squeeze on wages and rising household energy bills threaten consumer purchasing power.
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Bank of England governor Mark Carney yesterday warned that growth was weighted heavily towards the household sector while investment and exports were lagging behind. He did acknowledge that the rate of growth was "towards the top end of the advanced economies".
However, homeowners are showing increasing confidence, reveals the research by Zoopla.
The research found some 89% of more than 9,000 homeowners surveyed by the property search website predict further house price hikes in the next six months – the highest proportion since its records began in 2009.
Just 4% of home owners across Britain believe prices will drop, down from 17% this time a year ago. People typically expect prices to rise by 5.7% by next spring, with London homeowners predicting particularly strong growth of 8.3%.
Some 97% of Londoners surveyed expect to see values increase. Separate research by another website, Rightmove, published earlier this week, showed that house sellers' asking prices in London have jumped by 10% in the space of just one month to reach a new high of over £544,000.
Two-thirds of those across the survey who think property prices are on the up said property sales they have already seen in their area is their main reason for believing this.
Despite homeowner confidence remaining higher in the south than the rest of Britain, every region recorded an increase in the proportion of people who think prices in their area are rising.
The West Midlands and Yorkshire and the Humber recorded the biggest jumps in homeowner confidence over the last quarter. The proportion of owners predicting price rises increased from 78% to 90% in the West Midlands, while Yorkshire and the Humber has seen a jump from 72% to 84%.
The low point for home owner confidence recorded by the study was in winter 2010, when just over half (54%) of home owners were expecting price increases.