21 Sep Households across the UK positive about property price growth
UK house price sentiment remains positive with households in all regions believing that property prices increased in September, the latest index shows.
Some 22.5% of households surveyed across the UK said that the value of their home had risen over the last month, while 3.8% said that prices had fallen, according to the index from Knight Frank and Markit Economics.
The index, which is a bellwether for house price movements across the country, recorded a reading of 59.3 and has now had a reading above 50 for 30 months in a row. Any figure over 50 indicates that prices are rising, and the higher the figure, the stronger the increase. Any figure below 50 indicates that prices are falling.
However there is a north-south divide with the average reading for the north of England in September at 54.9 and the south of England at 64.1. This is the second widest gap between the two readings this year.
While households in all UK regions perceive that property prices rose in September, Londoners perceived the highest rate of house price growth over the course of the month, followed by those in the East of England.
However, in Yorkshire and the Humber perceptions of house price growth eased notably in September after rising for the previous three months to reach 60.4 in August. While households in the region still perceive that prices are rising, they are reporting that the pace of increases has slowed, with a reading of 54 this month.
The index also shows that households in all UK regions expect house prices to rise over the next 12 months, led by households in the East and South East of England while some 5.9% of households expect to buy a property over the next 12 months, while a further 6.4% said that they would purchase a house within one to two years.
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in September to 70 from 69.5 the previous month. However, the future HPSI remains well below its peak of 75.1 achieved in May last year, the report points out.
‘UK price sentiment remains in positive territory, and has stayed broadly stable since the election in May. However the north-south divide is evident, with the average reading for the north of England in September at 54.9 and the south of England at 64.1,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘This is the second widest gap between the two readings this year. Overall, households expect prices to rise over the next 12 months, with eight times as many households anticipating a rise in the value of their home as anticipating a decline,’ she explained.
‘Sentiment is being underpinned by the improving economy, with positive employment data as well as wage growth boosting buyer confidence. At the same time a shortage of stock on the market is serving, in some cases, to put upward pressure on prices. Again the north-south divide is in evident in the outlook for prices, with the average future house price index for the south of England at 76.0, compared to 63.9 for the north,’ she added.
Tim Moore, senior economist at Markit, pointed out that September’s positive out turn for UK house price sentiment marks two and a half years of recovery. ‘While perceptions of rising property values peaked in the first half of 2014, the index is still consistent with sustained house price growth across all UK regions,’ he said.
‘Rising wage rates, sustained economic growth and an element of pent-up demand have combined with greater mortgage availability and stretched housing supply to support UK property prices this summer,’ he added.
‘Meanwhile, households appear relatively positive about future property values, despite the prospect of a Bank of England rate hike in the first half of 2016, with almost half expecting rise in their house prices over the next 12 months and only 6% anticipating a fall,’ he concluded.