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December: Household Sentiment Remains on Upward Trajectory

The majority of households across 11 UK regions reported a rise in the value of their home over the last month, according to the latest research by Knight Frank & IHS Markit.

The majority of households across 11 UK regions reported a rise in the value of their home over the last month, according to the latest research by Knight Frank & IHS Markit.

The latest House Price Sentiment Index (HPSI), compiled by the groups, found that 17.6% of the 1,500 households surveyed across the UK believed the price of their home rose further in December, while just 5.3% said that they felt prices had declined.


Marking the fifth consecutive month that the index has indicated a positive trajectory, December’s index reading of 56.1 suggests that property prices rose over the month and it represents an increase from November’s HPSI reading of 55.3.


Regionally, the East of England was home to the largest majority of households perceiving that the of their home rose, with 61.6 respondents from this location reporting an increase over the month, followed by London and the South East, where this proportion stood at 60.8% and 58.9% respectively.


Respondents’ expectations of house price behaviour over the next year, or the ‘future HPSI’, dropped slightly in December to a reading of 62.3 from the 64.6 recorded in November, but stayed well-above the 50 mark – consolidating Britons’ optimism about house price growth in 2017.


Surveying households’ buying plans, Knight Frank & IHS Markit found that whilst the number of those intending to purchase property in the short-term has declined slightly, the proportion of those looking to buy in the mid-term, or within 2-5 years’ time, has risen from 11.5% in October to 13% in December.


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


“UK house price sentiment rebounded swiftly from its low point after the EU referendum, but confidence has now settled in at its lowest range for three-and-a-half years. This pattern has been seen across all UK regions, likely reflecting heightened economic uncertainty and a more subdued near-term outlook for household finances.


“At the same time, headwinds to house price momentum have been counterbalanced by ultra-low mortgage rates, entrenched supply constraints and resilient consumer confidence.


“Looking ahead, UK households expect an increase in their property value over the course of 2017, with those living in London and the South East the most likely to anticipate a rise. However, year-ahead forecasts moderated in December, and the proportion of UK households expecting no-change in house prices reached its highest since January 2013 (54%).”


Earlier this month, property listing portal Rightmove published their projections for the property market in 2017, stating their expectation of further growth in property prices over the next 12 months.