Homeowners in all parts of the UK are happy about the prospects for their properties, according to a recent survey.
The latest ‘sentiment index’ from Knight Franks and Markit Economics showed that homeowners in every region believed its home rose in value in August – the first time this has happened in the usually sleepy summer month since 2009.
The study, reported on Property Wire, showed that households in all regions expect that their bricks and mortar will be worth more in 12 months time – while 6.6 per cent expect to be dipping their toes into the market to purchase a home.
Confidence among homeowners tends to be good news for consumer spending. If a homeowner can see that their house is now worth more than they paid for it – and that that trend is only likely to continue – then they are much more likely to spend their disposable income, safe in the knowledge that they are sitting on a sound, growing asset with positive equity.
Householders with positive equity are able to use this asset in order to access cash. By remortgaging, for example, owners can get the funds they need for renovations or other expensive projects they may wish to fund.
Cash and equity rich home owners with big spending power can make a difference to GDP through consumption. An economy full of confident consumers will thrive, with a knock-on effect for those providing the products and services bought and, thus, on jobs. Demand for such products and services should keep prices competitive and ensure a healthy market for many.
But it’s clearly not good news for everyone. While home owners might be buoyed by confidence in the prices of their home, buyers – and especially first time buyers – face bigger hurdles to afford purchases. Part of the reason for high – and growing – prices is a lack of demand, a factor that is not easily solved.
Buyers cannot afford, however, to simply give up. The positivity of would-be sellers and the rise of prices presents a challenge but help is at hand to mean that it need not be an insurmountable one.
Tweaks to Stamp Duty rules should remove some of the up front cost for many house hunters and shared equity schemes and a competitive lending market all present a leg up to get on the first rung of the ladder. All of these have been spawned by the strength of the housing market and aim to break down the barriers that have emerged or increased as a result of this strength.
The trick for buyers is to be savvy and look at every possible way of cutting back the cost they face. Digital operators – the likes of HouseSimple online estate agent – are able to strip away many of the traditional fees and costs involved in buying and selling houses. The growth of such online companies is another knock-on effect of the positivity and strength in the UK and shows how the market can mature and develop to address such issues.
One thing that shouldn’t result from the current situation is complacency. In some respects house prices are both a symptom and a cause of the conditions in the rest of the market. Events completely out of the control of the standard UK home owner, such as the recent wobble with the Chinese economy, can puncture a hole in the positivity bubble and damage the strength – and associated spending benefits – that exists.