UK house price sentiment steady in March
Household sentiment was unchanged in March, compared with the previous month.
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Households across the UK perceive that the value of their home has risen over the last month, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit.
March’s reading was the eighth consecutive month that the index has been in positive territory.
However, as in the wider housing market, there remain fairly large regional variations. Households in nine of the 11 regions covered by the index perceived that the value of their property rose in February. Those in the South East (64.4) reported the biggest rise over the course of the month, closely followed by Londoners (64.0).
Households in the North East (48.2) and Wales (49.3) were the exceptions, with households reporting a slight fall in prices over the course of the month.
Download the report for the full regional breakdown.
Oliver Knight, an Associate in Knight Frank’s Residential Research team, said: “The latest survey data suggests that house price sentiment across the UK is becoming steadier. Households still report that values are increasing, but at a more modest pace than before the EU Referendum, which is consistent with wider housing market trends.
"House price expectations are still much more subdued than those reported in the three years leading up to the EU referendum"
_Tim Moore, Senior Economist, IHS Markit,
Outlook for house prices
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell in March to 66.8 down from February’s post-referendum high of 67.5.
A fall in expectations for house price growth in Scotland - to 51.0 in March from 62.2 in February - contributed to the slight dip in the headline future HPSI. Uncertainty surrounding a possible second referendum on independence may have weighed on household expectations.
However, March’s reading was still the second highest achieved by the index since the UK’s referendum on EU membership.
Households in the South East (75.6) remain the most confident about future price rises followed by those in the East of England (72.8) and the West Midlands (72.2).
“Future price expectations remain in positive territory, especially in the South and Midlands, but there are a number of headwinds which could weigh on the market, including rising inflation and second-round effects from Brexit. Yet at the same time, a lack of supply of housing for sale is underpinning pricing across much of the UK,” Knight added.
Tim Moore, senior economist at IHS Markit, said: “UK house price sentiment was relatively upbeat in March, which provides another signal that confidence has gradually picked up during the first quarter of 2017. This suggests that ultra-low mortgage rates and the resilient UK labour market are helping to offset the drag on house price sentiment from squeezed consumer finances.
“While sentiment has rebounded strongly since last summer, house price expectations are still much more subdued than those reported in the three years leading up to the EU referendum.
“Looking at house price expectations for the next 12 months, regional divergences widened across the UK during March. In particular, household sentiment in Scotland fell to the weakest for over four years, and the gap relative to UK-wide price expectations was the greatest since the survey began in 2009.
“Meanwhile, the latest survey saw London drop into the bottom half of the UK regional table for the first time since April 2010. By contrast, people living in the West Midlands were more confident about the outlook for their property values than at any time in the past two-and-a-half years.”