House price sentiment in the UK is still at a high level, with households across all regions thinking that property prices increased during September.
According to the latest index from Knight Frank and Markit Economics, some 22.5% of British households questioned said the value of their home had increased over the last month.
The index serves as an indication for house price movements across Britain. Any figure over 50 suggests that house prices are rising and the higher the figure, the stronger the increase. In the last month, the reading stood at 59.3.
There is a substantial north-south divide, with the average reading for the north of England standing at 54.9, while in the south, this figure is 64.1. This represents the second largest gap between the two readings this year.
Households across Britain believe that prices rose during the last month, with those in London perceiving the largest rate of growth. The East of England recorded the second highest level of indicated price rises.
However, in Yorkshire and the Humber, perceptions of house price growth slowed in the last month, after a growth during the last three months to reach 60.4. Households in the region still believe that prices are growing, but at a reduced rate, with a reading of just 54 for September.
According to the index, households across Britain believe price will rise during the next year. 5.9% of households said they expected to buy another property in the coming 12 months, with another 6.4% saying they would purchase a home in the next one-two years.
‘UK price sentiment remains in positive territory and has stayed broadly stable since the election in May,’ said Grainne Gilmore, head of residential research at Knight Frank. ‘However the north-south divide is evident, with the average reading for the north of England in September at 54.9 and the south of England at 64.1.’
‘This is the second widest gap between the two readings this year,’ she continued. ‘Overall, households expect prices to rise over the next 12 months, with eight times as many households anticipating a rise in the value of their home as anticipating a decline.’
UK households positive about property growth
Gilmore believes that, ‘sentiment is being underpinned by the improving economy, with positive employment data as well as wage growth boosting buyer confidence. She feels that, ‘at the same time a shortage of stock on the market is serving, in some cases, to put upward pressure on prices. Again, the north-south divide is evident in the outlook for prices, with the average future house price index for the south of England at 76, compared to 63.9 for the north.’
Tim Moore, senior economist at Markit, noted that September’s large house price sentiment shows two and half years of sustained recovery. ‘While perceptions of rising property values peaked in the first half of 2014, the index is still consistent with sustained house price growth across all UK regions,’ he stated.
‘Rising wage rates, sustained economic growth and an element of pent-up demand have combined with greater mortgage availability and stretched housing supply to support UK property prices this summer,’ he continued.
Concluding, Mr Moore said that, ‘households appear relatively positive about future property values, despite the prospect of a Bank of England rate hike in the first half of 2016, with almost half expecting rise in their house prices over the next 12 months and only 6% anticipating a fall.’