UK not gloomy about house prices, index shows
26-09-2012
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The latest Knight Frank/Markit House Price Sentiment Index (HPSI) shows that while households perceived that the value of their home fell again in September, the declines were the most modest in more than two years.
Nearly 10% of the 1,500 households questioned said the price of their home had risen, while 15% said that the value of their home had declined. This gave a HPSI reading of 46.8, up from 44.5 in August and the highest reading since July 2010.
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.
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends.
Looking ahead around 28% of households anticipate a rise in the value of their home over the next 12 months, compared with 21% expecting a decline. The resulting index reading is 53.2, up from August's reading of 51.8 and marking the highest reading since May this year.
London continues to lead the way, with households in the Capital expecting the biggest price rises over the next year with a reading of 63.1, up from 61.3 in August.
‘September saw some confidence continue to return to the UK housing market, but expectations of where house prices will be in 12 months' time remain well below levels seen earlier in the recovery and suggest little overall change in house prices,’ said Chris Williamson, chief economist at Markit.
‘However growing evidence of a rebound in the domestic economy since the second quarter and recent better news on the labour market have all helped to buoy sentiment in September, which could perhaps lead to further gains in the HPSI in coming months if the news flow continues to improve,’ he added.
Expectations for house price rises were recorded in seven of the 11 regions in August. But the north/south divide became blurred amid a turnaround in expectations among households in the North East (54.6), West Midlands (52.2) and the East Midlands (51). Households in these regions now expect prices to rise over the next year whereas in August they had expected prices to fall.
In contrast, households in Yorkshire and the Humber (46.4) and Scotland (47.1) now expectprice falls, whereas they had predicted prices would rise in August.
London continues to lead the way, with households in the Capital expecting the biggest price rises over the next year with a reading of 63.1, up from 61.3 in August.
Those living rent free (56.8) are the most optimistic about prices, while those renting from social landlords (51.2) expect the most modest rises in prices, followed by those who own their home outright (51.3) with no mortgage.
The top earners continue to be the most optimistic about house prices. Those earning more than £58,000 a year have an average future HPSI reading of 56.6, although this is down from 57.5 in August. Those earning less than £15,000 a year were next in line, with a reading of 52.8, up from 48.5 in August. Those earning between
£15,000 and £23,000 expect the smallest increase, with a reading of 50.6.
'This bounce in sentiment coincides with some brighter news on the economy, with serious questions being raised about whether the country is actually in recession. Better than expected employment data, as well as encouraging signs from the services and manufacturing sectors, are also helping to bolster economic confidence,' said Gráinne Gilmore, head of UK residential research at Knight Frank.
'But the house price performance is still localised, as the figures show, reflecting how the challenges within the housing market are affecting different regions. A lack of mortgage lending continues to act as a dampener on activity in many areas,especially among first time buyers,' she added.
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