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Property market confidence remains strong across the UK

Posted 23 November 2016 by Ben Salisbury

Knight Frank's house price sentiment index shows homeowners in the south of England are more confident than the rest of the UK that prices rose in November

The majority of UK homeowners believe that the value of their home went up in November, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit.

The HPSI reading of 55.3 was the fourth consecutive month following the post-brexit low seen in July that the reading was above 50 which indicates a positive score. However, the rate at which they expect prices to grow slowed compared to the same survey in October. Respondents in seven of the 11 regions believe prices went up in November.

Of the 1,500 households surveyed around the UK, 16.9% of them felt the value of their homes had gone up over the past month, with just 6.3% saying they had fallen

But expectations for future growth in house prices went up slightly in November, with households in all regions expecting the value of their home to rise over the next 12 months.

The future HPSI which measures what households think will happen to the value of their property over the next 12 months went up from 62.9 in October to 64.6 in November.

Within this general rise were significant regional variations, with households in the South of England more confident that prices will go up than respondents in the North of England, Scotland and Wales.

The index remains significantly below its previous peak of 75.1 from 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.”

 

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