- Households across the UK perceive that the value of their home rose in November
- However, mirroring wider trends in the housing market, the perceived rate of house price growth slowed compared to last month
- Respondents in seven of the 11 regions covered by the index believe prices increased over the course of the month
- The future HPSI rose slightly in November, compared with the previous month, with households in all regions expecting the value of their home will increase over the next 12 months
Change in current house prices
Households across the UK perceive that the value of their home rose in November, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit. This was the fourth consecutive month that the reading has been above 50 following the index’s post-referendum low in July.
Some 16.9% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 6.3% said that prices had fallen. This resulted in a HPSI reading of 55.3.
Outlook for house prices
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in November to 64.6 from 62.9 in October.
However, while the headline index rose month-on-month, there were still significant regional variations in terms of household expectations, with those in the South of England comfortably more confident that prices will rise than those in the North, Scotland and Wales.
The index also remains well below its previous peak of 75.1 achieved in May 2014, reflecting the more uncertain economic outlook.
Gráinne Gilmore, head of UK residential research at Knight Frank, said:
“Sentiment in the housing market is finding a post- EU vote stability. While households are confident that the value of their home is rising and will continue to do so over the next 12 months, they expect the velocity of this change to be lower than before June’s vote.”
“This chimes with the increased economic uncertainty as the UK starts to negotiate its way out of the EU. However, opinions on the housing market are also formed at a local level, and in many cases markets are characterised by a lack of supply of homes to purchase, which is underpinning pricing.”
Tim Moore, senior economist at IHS Markit, said:
“November’s survey reveals another positive month for UK housing market sentiment, with optimism up sharply from its post-referendum lows.”
“However, the strength of the rebound moderated since October and confidence levels are now comparable with those seen in mid-2013, when UK house price inflation was running in the low single-digits.”
“Households are also relatively cautious about the outlook for house price growth in 2017, suggesting that heightened economic and political uncertainty remain headwinds to confidence.”
“Meanwhile, the influence of supply constraints on house price expectations appears evident in latest figures. Most notably, people living in London and its commuter regions were far more likely to anticipate higher property values in 2017 than the rest of the UK.”