House price falls give knock to confidence

Only 49 per cent of people think it is a good time to buy a property, down from 58 per cent in December and the first time the proportion has fallen below half since the end of 2008, according to the Building Societies Association (BSA).

Nearly three out of 10 also said they neither agreed nor disagreed that it was a good time to enter the property market or trade up the ladder, the highest proportion since the index was first launched in June 2008.

The research was carried out shortly after both Nationwide and Halifax reported house price falls of 1 per cent and 1.5 per cent respectively for February, increasing speculation that the housing market recovery may be running out of steam.

The Building Societies Association said buyers were also likely to be in wait-and-see mode following the end of the Government's stamp duty holiday, while the forthcoming Budget and General Election were also adding to the uncertainty.

The majority of people still expect house prices to rise, with 59 per cent predicting further increases during the coming 12 months, although this is down from 66 per cent in December, and 10 per cent think they will fall. Overall, people are predicting average rises of 2.2 per cent during the coming year, down from expectations of a 3 per cent rise in December.

Paul Broadhead, head of mortgage policy at the BSA, said: "It is no surprise that people are uncertain if now is a good time to buy property.

"Potential buyers will be waiting to see the effect on the property market of the end of the stamp duty holiday. The forthcoming Budget and general election provide further levels of uncertainty to potential homebuyers. Once the election is over, and people are more confident about the economic outlook, we hope that buyers will return to the market."

Being able to access a mortgage has overtaken worries about job security to be the biggest perceived barrier to buying a home, cited by 57 per cent of people.

But around 56 per cent are still worried about unemployment, although this is down from 60 per cent three months ago.

Around 56 per cent of people also see raising a big enough deposit as a potential barrier to buying a home.

Despite low interest rates, 39 per cent of people are still worried about the affordability of monthly mortgage repayments, but only 18 per cent are concerned about future house price falls, down from 31 per cent a year ago and a peak of 51 per cent in September 2008.

n More than half of young people think they will be unable to buy their own home without financial help from their parents.

Around 54 per cent of people aged between 18 and 30 said they would need money from friends or relatives to raise the deposit required to buy a property, according to the National Housing Federation.