There has a been a slight deterioration of consumer confidence in the housing market, caused by short-term uncertainty from the General Election result, according to the Building Societies Association (BSA).
Younger Generation are the Least Confident About the Property Market
The BSA’s Property Tracker found that just 21% of consumers believe that now is a good time to buy, down from 29% in March this year. Nearly a third of consumers (30%) disagree that now is a good time to buy a home, the highest figure since December 2008 (37%) and up from 24% in March.
Perhaps unsurprisingly, it is the younger generation (18-24), that are the least confident about buying now, with only 16% believing that now is a good time to buy. A larger proportion (44%) of this age group believes that house prices will continue to rise over the next 12 months, compared to 37% across all ages. This makes it harder for them to raise a deposit and afford a home of their own.
Across all age groups, raising a deposit continues to be perceived as the single biggest barrier to home ownership, with 67% of consumers saying it would be one of the top three barriers stopping someone from buying their own home.
Why the Younger Generation Are the Least Confident in The Property Market
The 18–24 age group is consistently the least confident about entering the housing market, and the reasons are both financial and structural:
Lower incomes & slower wage growth – Young adults are more likely to be in the early stages of their careers, where salaries are lower and less stable. With inflation outpacing wage growth, disposable income for saving a deposit is limited.
Rising living costs – Rent, energy, transport, and food costs have increased significantly. This leaves less room to save each month, making it harder to build a deposit.
High house-price-to-income ratios – Even though mortgage rates are historically low, the amount of deposit needed relative to income is at record highs. This creates a psychological barrier as well as a financial one.
Uncertainty about the market – Many younger people worry about buying at the “wrong” time. Media headlines about potential price corrections, affordability crises, and political instability heighten their sense of risk.
Student debt & credit constraints – A growing number of young people carry large student loan balances or have short credit histories, which can impact mortgage eligibility and the size of loan offered.
Underlying Economic Conditions Impacting Confidence in the Property Market
“Care is always needed in interpreting consumer views in the aftermath of a political event like the General Election, particularly when the result is unexpected,” explained Paul Broadhead, Head of Mortgage Policy at the BSA. “We saw a similar fall in consumer confidence after the Referendum in June last year. However, by September 2016 confidence had largely bounced back.”
“Whilst the political effect may be short term, some of the underlying economic fundamentals are becoming more of a challenge,” he added. “Over the past year, annual CPI inflation has picked up, reaching 2.9% in May, whilst the latest earnings figures for April show that wages grew by just 1.7% in the year. This means that consumers need to spend more just to maintain their current standard of living, a significant extra pressure for those who are saving for a deposit. Mortgage rates, however, remain at historic lows and the market is highly competitive for those who do choose to purchase, whether for the first time or to move up the market.”
Monthly Price Rise
Despite this fall in confidence, average house prices rose in June, according to the latest House Price Index from Nationwide.
It found that prices rose 1.1% month-on-month in June, reversing the previous three months’ falls, and annual house price growth rose to 3.1%. In addition, the Index revealed that the gap in house price growth between strongest and weakest performing regions in Q2 is the smallest on record.
“At this point it is unclear whether the increase in house price growth in June reflects strengthening demand conditions on the back of healthy gains in employment and continued low mortgage rates, or whether the lack of homes on the market is the more important factor,” commented, Robert Gardner, Nationwide’s Chief Economist.
“While survey data suggests that new buyer enquiries have softened, it also indicates that this has been matched by a decline in new instructions. Indeed, the number of properties on estate agents’ books remains close to all-time lows.”
Tips for First-Time Buyers in a Volatile Market
Get mortgage approval in principle early to lock in low rates.
Save aggressively for your deposit – consider Lifetime ISAs or Help to Buy schemes.
Monitor local housing supply – low stock can drive prices up.
Factor inflation and wage growth into your budget to avoid overextending yourself
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