House price sentiment in UK up for six months in a row post Brexit vote
Households across the UK perceive that the value of their home has risen over the last month, but there are regional variations, the latest sentiment index shows.
It is the sixth in a row when the house price sentiment index from Knight Frank and IHS Markit has been in positive territory following a post-referendum low in July 2016.
Some 17% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 5.3% said that prices had fallen. This resulted in a HPSI reading of 55.8.
January’s reading was a slight fall compared with the 56.1 recorded in December, although it remains notably above its post-referendum low of 48.3 in July and appears to have settled since the vote on the UK leaving the European Union in June with an average index reading on a slightly longer three month rolling basis of 55.8.
However, there remain fairly large regional variations. Households in 10 of the 11 of the regions covered by the index perceived that the value of their properties rose in January.
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in January to 65.5, up from 62.3 in December which was the highest reading achieved by the index since before the referendum although it remains firmly below its peak of 75.1 achieved in May 2014.
‘The continued rise in the future sentiment index indicates that households are not focusing solely on the uncertainty around the path to Brexit,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
She pointed out that the economic fundamentals in the UK are relatively strong, with the country expecting to have experienced the strongest growth in GDP of any country in the G7 for 2016. The International Monetary Fund has also revised up its forecasts for economic growth in 2017.
‘At the same time, for those who have access to a deposit, mortgage rates are near record-lows. The lack of supply of new and second-hand housing stock for sale is also underpinning pricing, which is causing affordability issues is some areas. The Government is determined to try and boost the delivery of new build homes, and will publish details of its plans in a Housing White Paper shortly,’ added Gilmore.
According to Tim Moore, senior economist at IHS Markit, January’s index reveals a strong start to the year for UK house price sentiment, with expectations now the most positive since the EU referendum last summer. Exactly 40% of households anticipate a rise in their property value over the course of 2017, while just 9% forecast a reduction.
‘The recovery in housing market confidence has been helped by sustained growth across the UK economy during recent months, and resilient labour market conditions in particular.
Regional divergences showed little sign of narrowing in January, with people living in London and the South East by far the most likely to anticipate rising property values,’ he explained.
‘However, UK house price sentiment remains softer than seen during the three years leading up to the EU referendum. January’s survey also highlights that price expectations in all regions have moderated in comparison to those seen at the start of 2016,’ he added.