The Knight Frank/Markit's January House Price Sentiment Index, which measures what households think will happen to the value of their property over the next year, remained below, but close to, the 50 no change mark in January for the second month at 49.3, down from 49.7 in December.
This is the first time the index has remained below 50 for more than a month since May last year. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline.
Sentiment about future house price movements dropped sharply among those working in finance and business services. In this sector the index fell from 58.7 in December to 43.8 in January, the lowest since the index began in April 2009.
It is also the lowest reading across all sectors in January, reversing the trend over the last six months when workers in this sector expected the biggest rise in house prices. It is notable, said Knight Frank, that this decline in confidence co-incides with bonus season.
‘The verdict from households across the UK is that there will be little movement in their property values during 2012, with exactly half expecting no change and only slightly more anticipating a fall than a rise,’ said Tim Moore, economist at Markit.
‘Forecasts of roughly stagnant house prices are symptomatic of the caution prevailing about local job market conditions and the gloomy economic news spreading from the euro area,’ he explained.
‘People working in finance and business services saw a steep reversal in their house price expectations during January, highlighting the sensitivity of property value sentiment to labour market developments. Although the HPSI survey has a relatively short history, house price sentiment in this industry has so far been a useful bellwether for future developments in the wider market,’ he added.
