Date Published 22 November 2012
UK households perceive that the value of their home declined again in November, but at the most modest pace since July 2010.
That is the key finding of the latest Knight Frank/Markit House Price Sentiment Index.
It also revealed that the outlook for house prices hit the highest level in nearly two and half years, bouncing back from an eight-month low in October
Households in every region except Wales (45.2) expect the value of their property to rise over the next 12 months. London leads the way (63.3), followed by the South East (61.1), but perhaps more notably, households in the North West (53.8) are expecting price growth for the first time in more than six months.
Those aged 55 and over still remain the most cautious in their outlook for prices (53.6), although this is the first time respondents in this age bracket have said they are expecting price rises since June. Those in the 25 to 34 age bracket, the typical age for a first-time buyer, expect the biggest price rises, perhaps reflecting the increased challenges they face in order to climb onto the housing ladder.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: `The strong recovery from the marked slump in confidence seen in October coincides with better news from the economy, with official figures suggesting that the UK not only emerged from recession, but did so at a faster pace than expected in Q3.
`The more upbeat economic news seems to have lifted sentiment, especially the outlook for house prices. The last time the future house prices sentiment index reached similar highs was in the summer of 2010, which coincided with 0.7% rise in GDP in Q2 that year – the strongest economic performance since the initial recession, apart from the most recent 1% rise in GDP in Q3 2012.
`But more downbeat news is already emanating from the economy, with the Bank of England this week admitting that the country could slip back into recession in Q4. As such, there is a risk that the fillip to sentiment seen as a result of the better than expected GDP figures may unwind in the months to come.`
Chris Williamson, chief economist at Markit, said: `It’s too early to say whether the pick up in the outlook for house prices reflects an underlying improvement in market sentiment, perhaps linked to better availability of mortgages due to the Funding For Lending Scheme. It could of course merely reflect a feel-good factor arising from the better than expected growth of the economy in the third quarter. Most likely it’s a combination of the two, and we will hopefully see a steady continuation of improvement in mortgage conditions in coming months.`