Household sentiment stabilises but remains below peak

Key headlines for October 2014

  • Households in all regions covered by the sentiment index perceive that prices rose in October
  • Expectations for future price growth also rose, although they remain significantly lower than May’s record-high
  • For the fifth consecutive month, households in the South East expect prices to rise most strongly over the next 12 months
  • In London expectations for house price growth have rebounded to their highest level in six months
  • Some 6.2% of UK households plan to buy a property in the next year

Gráinne Gilmore, head of UK residential research at Knight Frank, said:

“Better than expected economic growth coupled with a likely delay to interest rate rises because of the turmoil in the Eurozone seems to have provided a fillip to house price sentiment this month.”

“The jump in price expectations in London may be due to a moving away from the idea of a “mansion tax” by the Liberal Democrats in favour of a reform to council tax. Yet, despite the rise in expectations in London, households in the South East still expect larger increases in the value of their homes over the next 12 months, reversing the trend seen during most of last two years.”

Tim Moore, senior economist at Markit, said:

“October’s survey indicates that house price sentiment has cooled from the peaks seen earlier in the year, but expectations of future house price rises are well entrenched across the UK.
“Stronger labour market conditions and an improving domestic economic backdrop should continue to support housing market conditions during the months ahead.”

“However, a repeat of last winter’s breakneck acceleration in house price growth is unlikely, given tightened lending criteria, subdued pay inflation and the greater possibility of future interest rate rises.”

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