Some 21.4% 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% reported a fall giving the HPSI a reading of 58.6. This was the twenty-eighth consecutive month that the reading has been above 50.
July’s reading was a slight decrease on the 59.5 recorded in June, although it remained the second highest reading so far this year - an indication that households across the UK are still confident that prices are rising.
Grainne Gilmore, Head of UK Residential Research at Knight Frank, said: “Overall expectations for future house price growth remain firm, underpinned by a strengthening labour market, improving economy and ultra-low mortgage rates. There is now more discussion about possible interest rate rises, but this, as well as the property tax announcements in the Summer Budget, has had little impact on average expectations for the direction of travel for house prices.
However, there are regional differences in the data, with the widest spread between the future HPSI reading in the North East and London than at any time since March last year, reflecting the differing dynamics of housing markets across the country, with local economic factors leading to a disparity in the levels of house price growth.”
Tim Moore, senior economist at Markit, said: “UK house price sentiment remained positive in July, and comfortably above the year-and-a-half lows seen during February. A gradual rebound in households’ property value perceptions has been underpinned by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment.
These factors are likely to support house price momentum through the second half of 2015, although tighter mortgage lending rules and stretched affordability have brought down UK households’ expectations of future house price growth from last year’s record highs.”
Andy Sommerville, Director of Search Acumen, comments: “Consistently rising house prices have become a fact of life for the residential property market in recent years, but it’s a worrying sign on the surface that this appears to be dampening people’s purchasing plans over the next 12 months.
All the same, the market is yet to see the full impact of Mark Carney’s comments about an impending interest rate rise. The prospect of mortgage price increases in the near future may prompt households to reconsider their plans, and bring extra momentum to the second half of 2015 as buyers look to get in ahead of rising loan and house prices.
Despite seeing some of the highest expectations for house price growth over the next 12 months, London and the South East are among the regions where intentions to purchase are the highest for the year ahead. Improving equity in their homes will help to give existing homeowners in these areas more financial clout.
The data suggests conveyancers in these regions can look forward to a particularly busy period, to build on the 16-month high for transactions recently reported by HMRC.”
