House prices contribute to consumer confidence stagnation

Confidence in house prices in the organisations’ consumer confidence index fell over the past 30 days by 2.3 points to 113.1 and there was also a 5.2 point drop to 103.9 points in confidence in house prices for the year ahead.

However, confidence in household finances improved for the past month, which was up 3.2 points to 58 points, and for the next 12 months, up 2.6 points to 48.1.

The latest scores meant the overall index rose 0.1 points to 94.9 overall, which meant it remained in negative territory.

The data is based on 6,000 interviews carried out over the past month by YouGov, with scores of more than 100 representing positive consumer confidence and scores below 100 indicating consumer confidence is ion negative territory.

Among workers, perceptions of business activity in the short-term worsened ahead of Christmas by 0.4 points, although there was a counterbalance in an improvement in outlook for the year ahead, up 1.9 points.

Employees were also more likely to say that their job security had improved over the past 30 days, up 1.9 points, but forward-looking measures stagnated with a 0.2-point decline.

Kay Neufeld, director and head of forecasting and thought leadership at Cebr, said: “Higher interest rates are creating substantial headwinds for the property sector as both prospective buyers and those with a fixed-rate mortgage coming to an end are feeling the squeeze of higher borrowing costs.

“This is reflected in the deteriorating sentiment around forward- and backward-looking home values. Meanwhile, sentiment regarding households’ financial situation seems to have bottomed out, as the forward-looking indicator rose for a third consecutive month, though both measures remain near record-low levels.”

Emma McInnes, global head of financial services at YouGov, said: “Recent headlines of the fastest decline in house prices since the financial crisis of 2008 are reflected in our latest consumer confidence, with both retrospective and outlook house value figures down since October.

“While this decline is off-set by a perhaps surprising uptick in household finance scores, the overall index still paints a bleak picture for consumer confidence, with the index score still the lowest is has been since April 2020 as the early effects of the Covid-19 pandemic began to take their toll.”