Key headlines for January 2015
- Households in all regions covered by our sentiment index perceive that prices rose in January
- Expectations for future price growth fell back across the UK in January, and are well below last May’s record-high
- Londoners expectations for house price growth over the next 12 months rose in January
- Some 5.9% of UK households plan to buy a property in the next 12 months
Change in current house prices
Households perceive that the value of their home rose in January, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics.
Some 19.5% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 3.1% reported a fall. This gave the HPSI a reading of 58.2 (see figure 1), the twenty second consecutive month that the reading has been above 50.
Grainne Gilmore, Head of UK Residential Research at Knight Frank, said:
“House price sentiment has slowed across the country despite the cut in stamp duty introduced by the Chancellor in December. Households in London and the South East signal slower annual rises in house prices this month than last month, an important development as these areas have been the engines of high house price growth over the last year.”
“Even the prospect of record-low interest rates being in place for longer than anticipated has not been enough to lift expectations for house price growth on a monthly basis in January, however this, coupled with an expected rise in wage growth will likely result in modest price uplifts over 2015.”
Tim Moore, senior economist at Markit, said:
“UK house price sentiment cooled again in January, with the survey’s gauge of current property values the least positive for over a year. All regions have seen a sharp moderation in house price sentiment from its highest point in 2014, with London and the South West experiencing the greatest slowdown from recent peaks.”
“January’s gradual drift in UK house price sentiment hints at slower trends for property values over the coming months, reinforced by stretched affordability and slow wage growth.”
“That said, the balance of households forecasting a rise in their property value this year is still high by the survey’s historical levels, suggesting that subdued interest rate expectations and falling consumer price inflation could limit the scale of any retreat in UK house price sentiment during 2015.”