UK house price outlook is positive, survey suggests
By Ray Clancy - www.propertycommunity.com
UK households believe the value of their properties have fallen for the 22nd successive month but the year ahead outlook for house prices remains positive, according to the latest House Price Sentiment Index from Knight Frank.
Lower prices were recorded in ten out of 11 regions in April with London the only place to see price increases.
A perceived reduction in home values was reported by 17% of households, versus around 8% indicating a rise. At 45.4, the resulting HPSI figure is down from March’s 20 month high of 46.6. Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline. Any figure over 50 indicates that prices are rising.
Sentiment was weakest in the North East (39.1) and Wales (39.2), which both recorded accelerated price falls. London continued to buck the trend, with those living in the capital reporting that the value of their home had risen for the second month running, albeit at a slower pace than in March (53.6, down from 55.1).
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. The index moves ahead of mainstream house price indices, confirming the advantage of an opinion based survey which provides a current view on household sentiment, rather than historic evidence from transactions or mortgage market evidence.
The future HPSI, which measures what households think will happen to the value of their property over the next year, remained in positive territory for the third consecutive month in April, posting only just below March’s 20 month high.
Approximately 29% of households anticipate a rise in the value of their home over the next 12 months, compared with 21% expecting a decline. The resulting index reading is 54.0.
Positive expectations for house prices were recorded in nine of the 11 regions in April, up from just six in March. Respondents in London remain by far the most upbeat (62.2), followed by those in the South East (56.4) and East Midlands (55.7).
Meanwhile the latest index from the UK’s Department for Communities and Local Government shows that in the 12 months to February 2012, UK house prices increased by just 0.3% taking the average UK mix-adjusted house price to £224,473.
Average house prices increased in both England and Scotland by 0.4% and 1.1% respectively. These increases were offset by decreases in Wales, where average prices decreased by 0.5% and Northern Ireland where average prices fell by 9.7% year on year.
The annual increase in average house prices in England was driven by increases in both London and the South East, where prices increased over the year by 1.7% and 1.2% respectively.
In February 2012, prices paid by first time buyers were 1.3% higher on average than in February 2011. For owner occupiers (existing owners) the prices remained unchanged.
Prices of new dwellings rose by 7.7% during the 12 months to February 2012, while the price of pre-owned dwellings decreased by 0.2% in the same period.