Households across the UK perceive that the value of their home rose in August, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit.
Some 15.2% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 12.4% said that prices had fallen. This resulted in a HPSI reading of 51.4 .
August’s reading was an increase from the 48.3 recorded last month following the EU Referendum – and takes the index back into 50+ territory, indicating prices rose on the month. However, it remains notably below the average HPSI reading for the first six months of the year before the vote (59.9). It is also significantly lower than the peak of 63.2 recorded in May 2014.
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 to 58.3 in August from 50.3 in July.
While the sentiment index has risen month-on-month, it remains subdued on a longer term basis. The last time the future sentiment index was below 60.0 for two consecutive months was back in March 2013.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The greater political confidence instilled after Brexit by the swift appointment of a new Prime Minister, coupled with the Bank of England’s base rate cut have provided some reassurance to markets in recent weeks. This is reflected in a tick up in the HPSI, although uncertainty about the medium-term outlook is weighing on sentiment overall.
“The regional variations in the index are striking in August, with households in several regions expecting a stronger rate of price growth over the next 12 months than those in London, a reversal of the trend seen in recent years.”
Tim Moore, senior economist at IHS Markit, added: “August data highlights a modest rebound in house price sentiment from the post-EU referendum low seen in July. Perceptions of current property values inched up during the latest survey period, although remain weak in comparison to those seen in the past three years.
“While the rebound in current price perceptions was only modest, there was an appreciable bounce in property value expectations for the next 12 months. Almost twice as many survey respondents (35%) expect a rise in their property value over the year ahead as those that anticipate a fall (19%). As a result, the index measuring future price expectations has recovered almost half of the ground lost in July. In line with the current price index, it also sits at a level last seen in early-2013.
“It is still too early to evaluate the full impact of the EU referendum on the UK property market, both at the national and local level. However, the latest survey data serves as an early indication that the aggressive policy action announced by the Bank of England in August has had a stabilising influence on overall property price expectations.
