Confidence in the property investment market is improving, as demand rises and lending increases. However, when it comes to house prices, expectations are waning slightly. The latest House Price Sentiment Index (HPSI) from Knight Frank and Markit revealed while households believe the value of their property to grow over the next year, it is thought this will be at a slightly slower pace than that anticipated in October.
Nevertheless, this doesn't mean positivity is coming to an end in the market. Indeed, conditions are strengthening and the three month rolling average of future HPSI hit a record high between September and November. Londoners continue to be the most optimistic when it comes to house price growth, while those that own their homes outright expect stronger price gains than those with mortgages or in the private rented sector.
Households believe that the value of their homes increased in November for the eighth consecutive month, with more than 20 per cent of the 1,500 homeowners surveyed across the UK stating that the price of their property had increased in the last month. This is more than double the number of people that considered their house price to have increased in November 2012, when just 9.1 per cent believed there had been growth. Indeed, just 5.2 per cent of households think the value of their home has fallen this month. This has led to an HPSI reading of 57.8. However, this is lower than last month's record of 59.1.
Tim Moore, senior economist at Markit, said: "The latest data suggests a small amount of froth has come off house price expectations since the survey reached a record high in October this year. However, with just one in 14 households anticipating a drop in property values over the 12 months ahead, there is a widespread belief that UK house prices will continue on an upward path in 2014. Looking at the regional picture, Londoners are still by far the most likely to forecast increases in their property values."
Confidence, optimism and expectations: Do they really affect the housing market that much?
- Tuesday 19 November 2013