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Affordability problems destroy property buyer confidence

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The housing market has hit a tipping point with seller confidence and buyer pessimism both reaching new extremes.

Buyer optimism is at its lowest since 2011, according to a quarterly Halifax confidence tracker, but sellers are more confident than they have ever potentially creating a mismatch which could slow the housing market.

The survey of 2,000 people showed 57% feel it will be a good time to sell in the next 12 months, with 32% disagreeing. Among owner-occupiers, that rises to 63% convinced now is a good time to sell.

In contrast, the number of respondents who feel it’s the right time to buy has plummeted 29 points in the last quarter, with respondents in London and the South East the most negative.

Over half of all buyers said inability to raise enough deposit was their biggest issue with worries about house price then interest rate rises in second and third place.

The most positive sentiment is skewed toward the East and South East, where 65% think it will be a good time to sell, compared with only 36% who say this in Scotland.

Overall confidence remains lowest in Wales and the North East, while nationally the most optimistic are based in London and the South East.

Craig McKinlay, mortgages director at Halifax, said: “Over the past two years consumer confidence has continued to grow, however it appears that we’ve reached a tipping point with the equilibrium between buyers and sellers much more out of sync.”

Writing for Mortgage Solutions, Robin Johnson managing director at KFH Chartered Surveyors, said house prices in the capital cannot keep rising at the pace they have this year.

“At some point, either buyers will be unable to afford property or investors will be unwilling to accept falling yields and capital appreciation can’t carry on forever – regardless of the currency you use. We are not facing a meltdown, simply a drawing of breath and the normalising of an excitable market,” said Johnson.