Knight Frank and Markit’s House Price Sentiment Index reveals that homeowners in the United Kingdom (UK) have confidence that their home values are on the rise. Opinions about how strong the growth will be depend on location, with those in London expecting very appreciable returns while homeowners in Wales and the North East predicting more modest gains. This is the seventh consecutive month the confidence index has reflected an increase and reflects the highest rating on record since it began measuring price sentiment in 2009. Experts say the differences in ratings reflect the localized nature of the UK housing market. For more on this continue reading the following article from Property Wire.
Households in every region across the UK expect the value of their property to increase over the next 12 months, with those in London the most confident about price growth followed by those in the South East.
The latest House Price Sentiment Index (HPSI) from Knight Frank and Markit, which reflects the opinions of 1,500 households across the country, illustrates the localized nature of the market at present, with households in the North East and Wales expecting more modest rises in values.
October’s survey is the first taken since the government brought forward the second phase of its Help to Buy scheme and, while the jump in price perceptions since September was relatively muted, the overall level of confidence about house price gains remains at unprecedented levels in the survey history.
Only one in 14 households expect the value of their home to decline over next 12 months and mortgage borrowers and those who own their home outright anticipate the largest rise in the value of their home in the next year.
Overall it is the seventh month in a row that the index has increased and more than 23% of the home owners surveyed said that the value of their home had risen over the last month, up from 6.3% in October last year. Only 5% of households said the value of their home had fallen over the last month, giving a HPSI reading of 59.1. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline. Any figure over 50 indicates that prices are rising.
This is up from last month’s record reading of 57.9 and marks the highest reading since the index began in February 2009. This is the most sustained period of upward price movements in three years.
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose to a new high in October at 71.1, up from 69.6, in September. On a smoother three month average basis, the future HPSI reading was 68.8, up from 68.2 in the previous three month period.
‘The momentum in house price expectations gained over the past few months continued this month, with households across the country expecting the value of their home to rise over the next 12 months,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘This is the latest evidence of increased confidence in the market, which has been boosted by the Government’s Help to Buy mortgage guarantee scheme, introduced at the start of the month,’ she explained.
‘The difference in the rate of growth expected in the regions is quite pronounced however, reflecting the localized nature of the housing market at present. Households in London and the South East expect the largest rise in prices over the next year, an indication of the strength of the housing market in the capital and in surrounding areas within easy commuting distance,’ she added.
Tim Moore, senior economist at Markit, said the outlook is positive. ‘Looking ahead, only one in 14 households forecast a decline in their property value over the next 12 months. In London, the number of respondents expecting a price fall between now and October 2014 stands at around one in 30 households, and across the wider South East this proportion has reached just one in 20,’ he pointed out.
This article was republished with permission from Property Wire.