Homeowners in Britain are more convinced that property prices will fall in the coming year than households in the US and other large European economies.
Even though values have fallen much further and for longer in the US, and Spain’s market is very weak, fewer homeowners there think prices will be lower in a year’s time, according to a poll conducted for the FT by HarrisInteractive.
With falling prices and bankruptcies among builders in both Spain and the US, the relative optimism in these countries is surprising and may help to limit price falls, given the importance of expectations in framing the housing market.
In contrast, the prevailing perception that the outlook for Britain’s housing market is weak looks likely to become a self-fulfilling prophecy, risking larger drops in prices than would be necessary to eliminate market excesses that have built up over recent years.
In the UK, 15% of homeowners thought prices would rise in the year ahead while 42% believed they would fall, giving a negative balance of -27. No other countries surveyed recorded a negative balance with Spain having a positive balance of +1, France of +8, Germany and the US of +10 and Italy of +35.