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Positive House Price Growth Still Expected in Spite of Confidence Dip

The latest index shows households’ sentiment across Britain dipped in July, but they still expect prices to continue rising over the next 12 months.

The latest index shows households’ sentiment across Britain dipped in July, but they still expect prices to continue rising over the next 12 months.

Heightened uncertainty surrounding the referendum vote has left 14.6% of the 1,500 households surveyed in Knight Frank’s latest index believing that the value of their home had fallen in July, whilst 11.2% of those surveyed perceived house prices to have risen instead.


With respondents from 9 out of 11 regions saying that prices in July had fallen, the House Price Sentiment Index (HPSI) reading declined from 59.7, where it stood prior to the vote, to 48.3 in July.


The decline is said to have been amplified by a higher than average ranking in the month ahead of the referendum, with the average HPSI reading in the three months prior to July standing at 60.3.


The largest fall in sentiment was recorded in London, where the index reading fell from 69.6 in June to 49.5 in July – a drop not seen since October 2012.


While sentiment towards the current property values has dipped, the report shows that householders still expect prices to continue rising in the next 12 months, albeit at a modest rate.


The projected HPSI, or householder expectations for house prices over the next year currently stand at 50.3, with anything above 50 indicating households remain positive that house prices will continue rising.


Regional attitudes towards the future of the housing market are also evident, with Londoners being the most confident that house prices will rise over the next 12-months with an index rating of 56.3, followed by those in the South East (54.5) and those in the East of England (53.2).


In light of the results Grainne Gilmore, head of UK residential research at Knight Frank said: “The impact of uncertainty in the wake of Brexit vote is clear from the HPSI index reading for July, especially in light of the relative strength of sentiment in the run-up to the vote.


"Although there has been a marked drop in the index, the readings are hovering around the ‘no-change’ mark, similar to levels in 2012/2013. As well as geographical variations, there are wide differences in expectations depending on age-groups, with those aged over-55 expecting the value of their home to dip over the next 12 months as well as those aged 18 to 24. All other age-groups expect prices to rise modestly.”

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