London regains lead on current and future house price sentiment

Key headlines for December 2015

  1. Households in most UK regions perceive that the value of their home rose in December
  2. Those in London perceived the strongest rate of price growth over the course of the month, while households in the North East reported no change in prices
  3. Households in all UK regions expect house prices to rise over the next 12 months, with the strongest growth expected by households in London
  4. Some 11.1 per cent of individuals said they plan to buy a house within the next two years, down from a 12 month average of 12.8 per cent

Gráinne Gilmore, Head of UK Residential Research at Knight Frank, said:

“The localised nature of the housing market is highlighted in the index, with the regional difference between households’ perceptions of house price changes in December at its greatest for nearly 18 months. This regionalised picture is expected to continue next year, with households’ in London expecting the strongest growth in prices in 2016.

“The supply of housing coming onto the market has dipped to record lows in recent months – affecting the ability of families to move up and down the housing ladder. The survey suggests this trend is also set to continue, with a lack of available housing also likely to continue to underpin pricing in many areas.”

Tim Moore, senior economist at Markit, said:

“UK households seem to anticipate little fundamental change in prevailing supply and demand dynamics over the course of 2016. Buoyant forecasts were reported for property values over the next 12 months, with expectations at a remarkably similar level to those seen at the end of 2013 and 2014.

“At the same time, the proportion of UK households expecting to purchase a property over the short-to-medium term has drifted down again in December, reaching its lowest since at least the spring of 2014.

“Existing mortgage holders and owners opting to stay put are among those driving the trend. As a result, the survey provides an advance signal that the flow of property coming on to the market will remain depleted in 2016, which in some areas could amplify the supply squeeze from stunted house building levels and historically insufficient new build volumes.”