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Households Remain Confident of House Price Growth

The majority of households in the UK expect house prices to continue rising over the next 12-months, according to a new survey.

The majority of households in the UK expect house prices to continue rising over the next 12-months, according to a new survey.

Knight Frank and IHS Markit’s latest House Price Sentiment Index (HPSI) found that 18.4% of the 1,500 households surveyed across the UK said that the value of their home had risen in September, with just 7% saying prices had declined.

The responses resulted in an index reading of 55.7, with anything above 50 indicating that prices are on an upward trajectory.

Whilst October’s reading represents a slight fall from the 56.9 recorded in September, the figure shows that sentiment towards the property market is bouncing back, as it is higher than the post-Brexit average HPSI reading of 53.1.

Mirroring the wider trend in the housing market, respondents in the majority of the regions covered by the index said prices had continued to increase in October, with Londoners reporting the biggest rise – a HPSI reading of 60.9.

The future HPSI, which quantifies the expectations of Britons for house price behaviour over the next 12-months, also experienced a slight dip in October, falling from 64.7 in September, but remained well-above the 50 mark at 62.9.

Further indicating that confidence in the UK’s property market is returning to pre-Brexit levels, the survey also shows that 6% of households across Britain are planning to buy property in the next year, a further 13% are planning to buy in the next 2 years and up to 24.5% of respondents said they will be looking to buy within the next 5 years.

Commenting on the results, IHS Markit’s senior economist Tim Moore said:

 “The key message from October’s survey data is that UK housing market sentiment has recovered strongly this autumn from the post-referendum jitters seen during the summer.

“There were signs of resilience across all UK regions, with households in the south of England most confident that property values will rise over the next 12 months.

 “Lower interest rates and stable mortgage availability have acted as shock absorbers for household sentiment in recent months. However, expectations for house price growth are softer than in the first half of 2016, suggesting that affordability constraints and Brexit uncertainty are still putting the brakes on price momentum.”

Last week, the Office for National Statistics (ONS) published its first economic figures covering the period post Referendum vote, signalling a healthy growth for the UK’s economy in 2016’s third quarter.

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