The latest data on House Price Sentiment from Knight Frank and Markit Economics has revealed that households across the UK perceived that the value of their home rose in February.
Some 23.2% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 4.1% said that prices had fallen. This resulted in a HPSI reading of 59.6.
This is the thirty-fifth consecutive month that the reading has been above 50. 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.
February’s reading was the highest recorded by the index since October 2014, indicating that households perceive that the value of their home rose at its strongest rate since then. However, February’s reading remains well below the peak of 63.2 reached in May 2014, reflecting the easing in average UK house price growth seen since then. Households in all of the eleven regions covered by the index reported that prices rose in February, led by households in London (68.1) and the East of
The current sentiment index was lowest for Scotland (51.7) and the North East (53.0), indicating that households in these regions perceived the most modest rise in prices across the UK in January.
Outlook for house prices
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell in February to 69.8, from 70.5 in January. While still indicating that households across the UK expect the value of their home to rise over the next 12 months, the future HPSI remains below its peak of 75.1 reached in May 2014.
There remains a clear north-south divide in terms of the outlook for house prices, with households in Southern England more confident about future growth over the coming 12 months.
Indeed, households in the South East were the most confident that prices will rise (78.7), followed by Londoners (77.8) and those in the South West (74.1).
In Scotland (62.0), the North East (60.6) and Wales (62.5), expectations for future price growth remain positive, but are more subdued.
Those who own their home outright are the most confident that prices will rise over the next year (75.4), followed by mortgage borrowers (75.2).
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The HPSI indicates that house prices are set to
continue to tick up modestly in the coming months. The market is being underpinned by the solid economic recovery and ultra-low interest rates – which now look as if they will stay put for some time to come. However a key dynamic of the UK housing market is that it is highly regionalised in terms of price movements, something which is highlighted by the HPSI.
The average annual spread of future HPSI readings – the difference between the lowest and highest readings across the regions – reached a new high this month, with households in the South of England expecting stronger growth than those in the North.
This signals that the regionalised nature of the market is unlikely to unwind in the short term.”
Tim Moore, senior economist at Markit, said: “February’s survey highlights a continuation of the steady upward trend in UK house price sentiment from the pre-election lows seen in early 2015. While pay growth has been sluggish and the economic outlook weakened in recent months, a resultant expectation that interest rates will stay low for longer seems to have boosted UK house price perceptions at the start of 2016.
In fact, survey data from Markit indicates that less than half of UK households (46%) expect a Bank of England rate rise over the next 12 months, down sharply from 71% in January and the lowest proportion since October 2013.”