Key headlines for June 2015
- Households in all UK regions perceived that property prices rose in June
- For the sixth consecutive month, Londoners perceived the biggest rate of house price growth over the course of the month
- Expectations for future house price rises accelerated to six-month high
- Households in the South East and London expect the strongest price rises over the next 12 months
- Some 6.6 percent of UK households plan to buy a property in the next year
Change in current house prices
Households perceived that the value of their home rose in June, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics.
Some 23.7 percent of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 4.6 percent reported a fall giving the HPSI a reading of 59.5. This was the twenty-seventh consecutive month that the reading has been above 50.
June’s reading is an increase on the 58.0 recorded in May and is the highest the index has been since October 2014, indicating that households believe that any uncertainty caused by the General Election has passed t.
Any figure over 50 indicates that prices are rising, and the higher the figure, the steeper the increase. Any figure below 50 indicates that prices are falling.
Despite the monthly rise, the overall reading remains well below its record high of 63.2 achieved in May last year.
Households in all eleven regions reported that prices rose in May, with Londoners (66.6) reporting the biggest perceived rate of house price growth over the course of the month. They were followed by households in the East of England (65.7) and those in the South East (64.0).
Sentiment was more positive in the South of England, with households in the North East (53.0) and North West (51.4) reporting the smallest price rises over the course of the month.
A lead indicator
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends.
Outlook for house prices
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose in June to 70.5, up from 70.0 in May.
Households are now more confident that the value of their home will rise in the next 12 months than at any time since December last year.
Those in the South East (78.3) were the most positive about the outlook for house prices followed by households in London (78.2) and in the East of England (75.0).
While households are confident that the value of their home will rise in the next 12 months, the headline future HPSI remains below its peak of 75.1 achieved in May last year.
Housing market activity
Some 6.6 percent of UK households said they planned to buy a property in the next 12 months, up from 6.4 percent in May. Individuals aged between 25 and 34 are the most likely to be considering buying a home in the short term, with 9.2 percent of such respondents saying they planned to purchase a home within the next 12 months, followed by those aged 35 to 44 (9.0 percent).
Grainne Gilmore, Head of UK Residential Research at Knight Frank, said:
“Households’ expectations for house price rises have reached the highest level this year as the results of the General Election provide some clarity on the outlook for the housing market and household finances. Interest rates remain advantageous, with mortgage rates hitting record lows for those who can clinch a new deal.”
“However the future house price index still remains below levels seen last year as constrained mortgage lending and affordability affect the market.”
Chris Williamson, chief economist at Markit, said:
“House price growth looks set to revive again after what appears to have been a lull due to the general election. The resumption of political stability is clearly good for the housing market. At the same time, survey data shows that low inflation has meant homeowners have pushed back their expectations of when interest rates will start rising, adding fuel to the bullish view on house prices.”
”Notable exceptions are Scotland and Wales, where devolution uncertainty seems to have led to marked falls in views on future prices in June following the election.”