Confidence in the UK housing market has slipped to its lowest level in five years, sounding renewed warnings over the health of the economy.
One in five British adults surveyed by the Halifax bank expect house prices will fall in the next year, in the weakest reading for consumer expectations since October 2012. Young people under the age of 25 and those living in London are found to be least optimistic.
The drop off in confidence comes amid growing concerns over the strength of the economy, with rising inflation and weak wage growth putting pressure on British households. It also comes as the Bank of England prepares to raise interest rates for the first time in a decade from as early as next week.
Despite the looming increase in the cost of borrowing, gathering a deposit is viewed as the biggest barrier to buying a home. According to the survey of almost 2,000 British adults, almost two-thirds see this as the main barrier, whereas just 15% worrying about the availability of mortgages or concerns about higher interest rates.
Of the 535 mortgage holders questioned in the survey, only a third said they were anxious about rising interest rates affecting their ability to meet repayments. This was down from 42% in 2014.
The survey also shows concerns over personal finances rising up the list of potential barriers, while job security was found to be a major worry among those looking to buy a home. The average house price stood at £222,293 in August.
The lowest levels of unemployment since the mid-70s are still failing to boost the bargaining power of employees in the UK, according to the latest official figures. When taking account of inflation, real wages fell by 0.4% in the three months to August, the sixth consecutive month of negative earnings.
London was the only region in the Halifax survey where the balance of people thought it was a bad time to buy, with those in the West Midlands and Wales the most positive. Those aged between 16 and 24 were the only age group with a negative buying outlook, while those over 65 were the most positive. Across the UK about half of those surveyed thought it would be a good time to buy.
Russell Galley of Halifax said: “Housing market optimism has declined significantly over the past year, with almost half of people expecting a general slowdown in the market.”