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Househunters say NO to interest rate rise

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Propertyfinder.com’s April survey of househunters reveals a resounding ‘No’ to higher interest rates.  Confidence in the housing market slipped sharply in April with 64% of respondents saying they expected house prices to fall over the next 12 months compared to 48% in March (see chart 1). 57% of house price pessimists blame fears of rising interest rates for their view, the highest level since August 2004, when interest rates went up to 4.75% (See chart 2).

Overall, respondents expect prices to slip 7.7% over the next 12 months compared to a drop of 2.6% in March.

Jim Buckle, managing director of propertyfinder.com comments:

‘There is no justification whatsoever for the Bank of England’s Monetary Policy Committee to increase interest rates.  The economy is already under enough pressure.  Our survey shows that the fear of unemployment has risen sharply, spurred by the high profile collapse at Rover.  With consumer confidence already shaky and higher taxes likely to take another bite out of consumer incomes, growing job insecurity is the last straw.

The magnitude of the drop in confidence in April was certainly exaggerated by the general election.  Our research shows that this always happens at election time and without any rational explanation.  We expect confidence will steady somewhat from here on. An early indicator of this can be seen in the number of referrals propertyfinder.com made to estate agents, which rose 20% between March and April.’

Stuart Law of Assetz Limited, the property investment specialists confirmed that the property market was "at a sensitive stage at present and any upward move on base rates would impact on confidence significantly. In addition with the slowdown in retail spending recently this would be accelerated by any further feeling of loss of wealth that a further rate rise would invoke."

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