This is the fourteenth consecutive month that the (HPSI) from Knight Frank and Markit Economics has shown that households reported a rise in the value of their property.
Households in all 11 regions covered by the index reported that prices rose in May, with those living in London perceiving that the value of their home had risen at the strongest rate at 69.9, followed closely by households in the South West at 69.2. While Londoners were the most confident that the price of their house rose in May, this month’s index reading was lower than the record of 74.9 in April.
Expectations for future price growth also hit a record high in May, indicating that prices are expected to rise at the strongest rate since the index began in early 2009.
Households in every region expect the value of their home to rise, with record highs reached in the East of England at 79.7 and the South West at 79.3. In London and the South East expectations moderated from recent peaks.
The index also found that some 6.5% of UK households plan to buy a property in the next year, up from 5.1% in April. A further 21.6% of households say they plan to purchase a property within the next five years, and 25.7% indicate they want to buy a house or apartment in more than five years’ time. Around 18% of households say they have no plans to buy at any stage and 28% of households are undecided.
‘There is no sign of demand for new housing slowing. Some 6.5%, or 1.72 million, of households plan to buy a property within the next year,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘Around one in 10 of those surveyed aged between 35 and 44 said they wanted to purchase a property before next summer, some of whom will be likely trying to climb on to the first rung of the ladder and others who may be trying to trade up to gain more space,’ she pointed out.
She also pointed out that the future price sentiment index only just crept to a new record high this month, with the scale of price increases expected by Londoners and households in the South East falling back.
‘The widespread discussion about policy intervention in the housing market is likely to have reined in price expectations in some areas, although there was still a strong rise in price growth expectations among households in the North East and East Midlands, regions where house prices are still below levels seen at the peak of the market in 2007,’ she added.
According to Tim Moore, senior economist at Markit, although the survey’s current house price sentiment index hit a new peak in May, expectations for property values are no longer forging ahead at such a breakneck speed.
‘The balance of households forecasting house price rises over the year ahead was only fractionally above April’s record high, as London and the South East saw expectations moderate from recent peaks. Moreover, the capital came within a whisker of losing its status as the region with the strongest expectations for property values over the next 12 months,’ he explained.
‘With greater central bank vigilance towards housing market conditions on the horizon, households’ property price expectations are likely to become an increasingly important part of the policy assessment toolbox,’ he added.
