Following from a modest dip in confidence in July, the latest House Price Sentiment Index (HPSI) shows the majority of households in the UK perceived that the value of their home rose in August.
Knight Frank and IHS Markit's newest HPSI gathered responses from 1,500 households across the UK and found some 15.2% believed the value of their home had risen in August, while 12.4% said prices had declined.
Out of the 11 regions surveyed, six saw households anticipated a rise in the value of their property in August, with those in the East of England perceiving the largest increases, now standing at 58.5 on the index, followed by those in the South West (55.0) and the South East (54.5).
Serving as an indicator for house price trends, August’s HPSI reading of 51.4 is a sign that home prices are on the rise. Compared to July’s reading of 48.3, August’s HPSI also indicates a rebound in household sentiment.
However, while the index has returned to a reading above 50, it remains relatively subdued when compared to the average HPSI pre-Referendum reading of 59.9 for the first six months of the year.
The future HPSI or households expectations for the market over the next 12 months rose to 58.3 in August from 50.3 in July – suggesting householders believe that prices will continue to grow over the course of the year.
Regional variations were also visible in the future HPSI in parallel with trends in the housing market; households in the East of England were the most confident that prices will increase over the next 12 months (68.3), followed by those in the South west (64.7) and the South East (63.0).
Commenting on the results, Knight Frank’s head of UK residential research Gráinne Gilmore 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."