Households perceive that the value of their home rose in February, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics.
Some 19.0% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while 6.0% reported a fall. This gave the HPSI a reading of 56.5 (see figure 1), the twenty-third consecutive month that the reading has been above 50.
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However, while the majority of households in the UK perceive the value of their property has risen in the last month, the overall reading continues to moderate (figure 1). February’s index represents the lowest perceived rate of price growth since August 2013.
Households in ten of the 11 regions covered by the index report that prices rose in February, with Scotland (49.4) the only exception. This is the first time any region within Great Britain has reported a price fall in 18 months.
The future HPSI (figure 1), which measures what households think will happen to the value of their property over the next year, fell again in February to 68.2, down from 69.5 in January.
This is the third consecutive monthly fall in house price expectations across the UK and the lowest reading since August 2013. The future HPSI stands well below its record high of 75.1, which was seen in May 2014.
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By GlobalDataHouseholds in the South East (73.8) expect the strongest price rises over the next 12 months, followed by those in the East of England (72.9) and London (72.9).
Interestingly, households in Scotland still expect average prices to rise over the coming 12 months (61.0), despite a perception that prices fell in February.
Knight Frank head of UK residential research Grainne Gilmore said: "The easing in house price sentiment indicates that the market is in for a steadier year than 2013 or 2014. While buying intentions are relatively high, there is less conviction that prices will rise strongly this year. Just 43% of households expect the value of their home to rise over the next 12 months, compared to 55% in February last year.
"The moderation in sentiment comes despite the prospect of a prolonged period of ultra-low rate inflation and low unemployment. However new mortgage rules and affordability constraints in some parts of the country are likely to weigh on price growth. In the shorter-term, many households are focussing on the election, the outcome of which could change some household finances if taxes or benefits are reformed."
Markit senior economist Tim Moore said: "UK house price sentiment continued to cool in February, with both the current and future property value indices falling further below the peaks seen in 2014.
"Despite a sustained retreat in recent months, the latest survey indicates that overall house price sentiment remains at an elevated level by historical standards.
"Around six times as many UK households forecast a rise in their property value during the year ahead as those that expect a decline.
"Improving mortgage availability, rising consumer confidence and a reduced likelihood of impending interest rate rises all look set to support UK property prices over the course of 2015."
Some 6.2% of UK households said they planned to buy a property in the next 12 months. This is up from 5.9% in January.
On a regional basis, one in ten households in London are planning a purchase in the next 12 months, followed by the West Midlands where 9.2% of households said they would be buying a property in 2015.
