Consumer optimism linked with real estate success

Current consumer confidence levels are likely to have a positive impact on the real estate industry as they appear to correlate.

That's the assessment of RP Data and its senior research analyst Cameron Kusher, who wrote that the residential property sector is poised to improve as a result of building consumer confidence.

He explained: "The time to buy a dwelling index was recorded at 140.0 points in January [which] indicates most respondents feel it is a good time to buy a home.

"It is no surprise so many respondents feel it is a good time to buy, with standard variable mortgage rates having fallen by 135 basis points since October 2011 and home values having fallen over successive years in 2011 and 2012."

Mr Kusher said the rising confidence stems from the record low interest rates and from the fact that property prices are generally lower than they were a few years ago.

But this confidence hasn't yet translated into a greater number of transactions which is being attributed to a change in attitude towards debt.

RP Data noted that for the past five years, households have been saving about ten per cent of their income - this is after a falling percentage of savings since the 1970s.