Households across the UK expect property prices to rise in next 12 months, research shows

Households in every region in the UK expect the value of their home to rise over the next 12 months as optimism over future price rises reaches its highest level in three years, according to a new report.

 Londoners are the most optimistic about house price rises over the next year, closely followed by those in the East Midlands while those in the North East expect the most modest increase in values, the latest Knight Frank and Markit House Price Sentiment Index shows.

It also found that 15% of the 1,500 homeowners surveyed across the UK said that the value of their home had risen over the last month, while only 8.6% indicated the value had fallen. This gives a HPSI reading of 53.2, the highest since June 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.
 
June’s reading, which is up from 52.2 in May, marks the third month that the current price index has been in positive territory after 33 months of readings of 50 or under. The index signals that after three years of falling prices, households are increasingly confident that the value of their property has started to rise.

The future HPSI, which measures what households think will happen to the value of their property over the next year, remained in positive territory for the 17th consecutive month.

Londoners still lead from the front, with an index reading of 73.1, although this is down from 76.3 in May. London is closely followed by the East Midlands, with a reading of 72.9, up from 55.8 in May and marking the biggest monthly uplift in expectations since the index started.

Households in the North East are expecting the most modest rise in prices over the next 12 months, with a reading of 56.2, although this was up from 52.2 in May.

‘After three years of fairly bleak housing sentiment, June’s data suggests that the market has turned a corner. London leads in terms of house price expectations, but it is interesting to note the increase in confidence across most other regions. This coincides with initial evidence of some ‘green shoots’ of recovery in regional economic activity in the UK,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.

 

‘It seems clear that more upbeat economic data coupled with the government’s multi billion pound plans targeted at the housing market and record low interest rates, have contributed to a sustained improvement in households’ expectations for property values,’ she added.

According to Tim Moore, senior economist at Markit, house price expectations were already on the up when the government’s Help to Buy scheme was launched in the spring, but this survey is another signal that the scheme has turned on the after burners for UK property values.
 
‘Highlighting a huge shift in sentiment since the Budget, now four times as many UK households expect house prices to rise over the coming year as those that anticipate a fall, up from twice as many in March and an evenly balanced outlook as recently as last October,’ he said.

‘Buoyant expectations have spread across the UK amid an upturn in current house prices and improving mortgage availability since the spring. Households reported the strongest increase in their property values for three years in June,’ he pointed out.

‘Looking to the regional trends, while London was alone in seeing higher house prices at the end of 2012, the latest survey showed perceptions of higher property values in around two thirds of all UK regions,’ he added.

 

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