They presented a united and positive front in all 11 UK regions that are monitored for the House Price Sentiment Index from property consultants Knight Frank and economics consultancy Markit. It is the first time that all regions expect the price of their home will rise for more than two and a half years.
Londoners are more positive about the prospect of their homes rising in price over the next 12 months followed by those in South East and Wales, according the index which is based on a survey of 1,500 households across the country who are asked whether the value of their home will rise or fall over the next year.
And although households perceive that the value of their property declined over the last month it has done so at the slowest rate since June 2010.
Some 8.5% said that the value of their home had risen over the last month, while 11.7% said the value of their home had fallen, giving a HPSI reading of 48.4. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline. Any figure over 50 indicates that prices are rising.
The reading of 48.4 is up from 47.6 in January, and marks the highest reading since June 2010, indicating that prices fell at the slowest pace over the last month than at any time since then.
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. The index moves ahead of mainstream house price indices, confirming the advantage of an opinion based survey which provides a current view on household sentiment, rather than historic evidence from transactions or mortgage market evidence.
While there are regional differences in the outlook for prices, respondents in all regions expect the value of their property to rise over the next 12 months, the first time this has happened in more than two and a half years.
Londoners at 64.2 lead the way, but are closely followed by those in the South East at 62.2 and, perhaps more surprisingly, by Wales at 60.5. This marks the first month that households in Wales have reported that they are expecting property values to rise since July last year. Households in Scotland and the North East are also expecting prices to rise for the first time in three months.
The extent of the price rises expected however still shows a north/south divide, with households in the southern regions more optimistic about prices rises than those in the north.
There was also a large jump in optimism about house price rises among those who own a home with a mortgage. The reading for this group rose from 56 in January to 62.3 this month, the highest reading since June 2010.
Likewise those aged between 35 and 44 are also more upbeat about possible house price rises over the next 12 months than at any time since June 2010.
‘The optimism over house prices seen at the start of the year has strengthened sharply this month, with households now more upbeat about the outlook for house prices than at any time since June 2010. Households in every region expect prices to rise, reflecting a real change in outlook across the country,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘The data suggests that households have brushed off the rather gloomy economic news, and instead have been buoyed by positive signals emanating from the mortgage market in recent weeks, with lending rates falling sharply and lending to new buyers picking up. Indeed the HPSI readings show that mortgage borrowers are among those who are most optimistic about house prices. Likewise, the outlook of those aged between 35 and 44 has becoming much more positive, and it is these buyers, who will typically be buying their first or second property, who are set to benefit from the looser mortgage lending conditions,’ she explained.
‘There are hopes that the Bank of England’s Funding for Lending scheme will further boost lending this year, and signals from the new Bank of England Governor that the base rate may be kept on hold for a prolonged period will only help those trying to climb onto the property ladder,’ she added.
Chris Williamson, chief economist at Markit, said that the survey provides encouraging evidence that the property market has seen a strong start to the year. ‘The improvement in sentiment about current and future house prices provides firm evidence that the Funding for Lending Scheme is already having a noticeable beneficial impact on the market, via the improved availability of mortgages and the simple fact that people perceive that the new initiative will drive a recovery of the housing market,’ he pointed out.
‘With rising housing market sentiment adding to the news from the PMI surveys of a return to growth of business activity in January, the picture for the UK economy has brightened considerably since late last year,’ he added.
