Falling consumer confidence could threaten the housing market’s tentative autumn recovery as households become increasingly pessimistic about the economy and their own finances.
The latest BRC-Opinium Consumer Sentiment Monitor shows expectations for the economy over the next three months fell six points to -34 in September, reversing four months of improvement.
Expectations for personal finances also deteriorated sharply, dropping from -9 in August to -15 this month, while expectations for saving fell from -5 to -7.
The findings come at a sensitive point for estate agents, with buyers returning to the market following the summer but affordability and economic uncertainty continuing to constrain activity.
FRAGILE RECOVERY
Rightmove recorded a 5% increase in buyer demand during the first week of September, considerably stronger than the average 0.4% uplift at the same point over the previous five years.
However, buyer demand remains 9% below last year’s level and the number of homes available for sale is at a 12-year high for this time of year, leaving sellers competing for a smaller pool of buyers.
RICS has also reported signs of stabilisation, with new buyer enquiries improving to a net balance of -19% in August from -28% in July.
But it warns that the recovery remains fragile, with uncertainty surrounding borrowing costs and speculation over possible property tax changes in the Budget creating further caution among buyers and sellers.
HOUSEHOLD FINANCES
The BRC findings are based on research among 2,000 UK adults conducted by Opinium between 8 and 11 September.
Helen Dickinson, Chief Executive of the British Retail Consortium, says: “Consumer confidence in the economy stumbled after four months of improvement, with a similar trend for sentiment around personal finances.
“This decline was much sharper among women and with households bracing for a sharp rise in energy costs this winter, and bills rising faster than shop prices, it is little surprise that expectations of retail spending fell, even as overall spending plateaued.”
She adds: “With the Budget looming large, consumers want to see Government prioritise bringing down the cost of living.”
