Key headlines for December 2014
- Households in all regions covered by our sentiment index perceive that prices rose in December
- Expectations for future price growth fell back across the UK in December, and are well below May’s record-high
- Londoners expectations for house price growth over the next 12 months moderated sharply in December
- Some 6.1% 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 December, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics.
Some 22.9% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 4.7% reported a fall. This gave the HPSI a reading of 59.1 (see figure 1), the twenty-first consecutive month that the reading has been above 50.
Grainne Gilmore, Head of UK Residential Research at Knight Frank, said:
“The reform in stamp duty has not delivered an immediate boost to sentiment across the UK housing market as a whole, but Londoners seems to be feeling the impact.”
“There has been a notable drop in the rate of house price growth expected by those living in the capital, perhaps a combination of slower house price growth seen recently and the fact that a higher proportion of buyers and home movers in the capital will now pay more in stamp duty under the new rules than those based elsewhere in the country.”
Tim Moore, senior economist at Markit, said:
“The latest survey reaffirms that UK housing market sentiment has drifted down throughout the second half of 2014, after reaching a high watermark early this summer. Moreover, views on year-ahead house prices softened in December, despite a boost from stamp duty reform.”
“Heightened political and economic uncertainty may be dragging on households’ expectations for their property values over the course of 2015. However, recent falls in consumer price inflation will boost household budgets in the New Year and should reduce the likelihood of imminent base rate rises from the Bank of England.”