Consumer confidence slides in February spelling potentially bad news for property market
UK consumer confidence took a hit in February falling to the lowest level in over a year, a survey from pollsters NOP GfK – conducted on behalf of the European Commission – showed recently. The reasons for the slump includes concerns on the debate over remaining in or leaving the European Union combined with evidence of global growth wobbles driven by China.
“Despite the positive impact of continued low interest rates and subdued inflation on our day-to-day household budgets, the feeble outlook for growth and a variety of economic uncertainties since the start of the year has depressed our New Year optimism,” said Joe Staton, Head of Market Dynamics at GfK.
These two significant developments means Britons felt less confident in February this year than they had since January 2015, despite continued low interest rates and rising Additional details in the survey showed that UK consumer’s confidence over the British economy in the next 12 months slid, as did their confidence over making major purchases, which includes buying a house.
While this measure isn’t the only indicator of confidence in the UK it is a key one and suggests the UK’s housing market could suffer as people think twice about making such a major purchase due to concerns on other matters, including the outlook for the British economy.
But, as we have stated in previous blogs, lower for longer interest rates, rising employment and an ongoing lack of properties for sale could well combine to make property auctions a more popular method for buying homes or investments for some people. Why? Well, there’s always a chance for a bargain at an auction and people are often encouraged to attend and bid on that possibility alone!
Also, if owners need to sell a property quickly they can do so at auction and even if the property doesn’t make the reserve price there’s the potential to negotiate with unsuccessful bidders afterwards to still get a sale on auction day.
Additional research published recently by Lonres shows that 39% of sellers of luxury London homes cut the asking prices in London’s most expensive and sought after boroughs in January. As London often signals a change in property price cycles, if this trend continues then it could be a very early indication that property price inflation may, at some point, begin to slow.
Potential first-time buyers may jump for joy if this happens, but property auctioneers may also welcome such news. That’s because when a vendor chooses to sell property at auction there is always a possibility that the buyers in the room could ‘bid up’ the price of the property for sale resulting in the seller getting a higher price than expected and a commitment to pay that price formally agreed on the day.
So, while the UK’s economic outlook is cloudy, some potential positives for property auctions remain.