Homebuyers' confidence dives

Homebuyers' confidence dives

Confidence in the property market has taken a nosedive, with 64% of people expecting house prices to slip 7.7% in the next year, according to research published today.

A survey of house hunters carried out by Propertyfinder.com in April showed an increase in the number of people who expect house prices to fall in the next 12 months.

In the previous month's survey fewer than half (48%) of respondents expected a house price fall of an average of 2.8%.

Over half (57%) of people who said in April they thought house prices were going to fall blamed their fears on rising interest rates, while 22% felt that rising unemployment would put the housing market under pressure.

Homebuyers are reacting prudently to the changing market, and interest rate fears, by reducing the amount of debt they are taking on, the research showed. In May last year, buyers were looking to buy homes costing the equivalent of 4.9 times their household income - by April 2005 this had fallen to 4.2 times income.

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Propertyfinder.com said buyers understand they are in a strong bargaining position and no longer have to stretch themselves in making offers.

In April, buyers were taking seven weeks longer than they were in January to choose a home, and they were viewing more properties before making a choice.

"Buyers are feeling less pressured now that the market is cooler and less frenetic than in recent years", said Jim Buckle, managing director of propertyfinder.com. "They are doing the right thing by examining their finances and managing their potential borrowings prudently.

"This is a good sign that despite this softer patch, there is no need to fear a crash."

Guardian Unlimited © Guardian Newspapers Limited 2005