YouGov/Cebr’s Consumer Confidence Index has fallen for the first time in a year, decreasing from 110.0 in November to 109.5 in December. The figures show that while people remain optimistic about the UK housing market after a year of robust growth in the price of bricks and mortar, consumers are still concerned about their personal economic situations.
The fall in the Consumer Confidence Index comes as new analysis of YouGov’s economic data shows that property prices have greatly inflated consumer confidence over the last year. Positive feelings about the state of the property market have become increasingly ubiquitous in 2013, as reflected in the +43.7 point rise in the house price index since January. However, sentiment in other important areas – job security, household finances and workplace activity – has risen by just +5.2 points in the same period. By contrast, during the 18 months leading up to January 2013, the house price index scores topped these other measures on just four occasions.
YouGov/Cebr’s findings appear to support Bank of England Governor Mark Carney’s decision to phase out the Funding for Lending scheme for mortgage lending and instead refocus it towards business lending. The Governor’s move was a bid to prevent the housing market from overheating and support a wider business-led recovery.
Resurgent housing market has driven consumer confidence values
The decline in the Consumer Confidence Index comes as YouGov’s HEAT data shows the extent to which the surge in people’s economic optimism over the past year has been driven by rising house values. Since December 2012, consumers’ perceptions of the change in house prices have risen by +42.6 points, from 96.3 in December 2012 to 138.9 a year later.
The large improvement in the housing measures hides a much slower rate of increase in the other measures that make up the Index. Since December 2012, the average combined scores for job security, household finances and business activity in the workplace have gone up by just +5.4 points, from 94.3 to 99.7. A score below 100 means that more people are pessimistic than optimistic, implying that presently consumers still have underlying concerns about the extent to which the economic recovery is having a positive impact on their day-to-day lives.
While the measures for job security, household finances and business activity in the workplace have all improved over the past year, the increase in these indices of consumer sentiment has been more modest. YouGov’s tracking data also suggest that while people believe the economy in general is picking up, they have yet to fully feel the benefits in their own lives. Although the number of consumers thinking unemployment will increase a lot over the next 12 months has fallen 5.6 percentage points (from 17.0% in February to 11.4% in December), people’s own fears of being laid off in the next year has fallen by just 2.3 percentage points (19.2% to 16.9%) during the same period.