Knight Frank: Households Enter 2013 with Renewed Optimism on Property Prices

London, UK (PRWEB UK) 18 January 2013

Knight Frank/ Markit House Price Sentiment Index (HPSI) January 2013

Key headlines for January


UK households perceived that the value of their property declined over the last month, for the 31st consecutive month, albeit at the joint-slowest rate since July 2010

But UK households in eight of the 11 regions expect that the value of their home will rise in 2013

Londoners more optimistic about prices rises over next 12 months than at any time since June 2010

Households in Wales expect the biggest fall in the value of their property over the next 12 months

Change in current house prices

Knight Frank/Markits House Price Sentiment Index (HPSI) signals that average house prices fell for the 31st consecutive month in January.

The proportion of homeowners reporting that the value of their home had risen was 7.7%, the same as in December, while 13% said the value of their home had fallen, compared to 14% last month.

This resulted in a HPSI reading of 47.6, matching the reading in November, and which together are the highest readings since July 2010, indicating that house prices fell more modestly during these months than any time over the last two and a half years.

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.

A lead indicator

Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. Figure 3 shows that the index moves ahead of mainstream house price indices, confirming the advantage of an opinionbased survey which provides a current view on household sentiment, rather than historic evidence from transactions or mortgage market evidence.

Outlook for house prices

The future HPSI (figure 2), which measures what households think will happen to the value of their property over the next year, rose this month, showing an increased confidence that prices would rise modestly in 2013.

The overall index reading for the UK was 54.5, up from 53.1 in December. On a smoother three-month average, the future HPSI in January was 54.5, up from 53.2 in December and the highest since August 2010.

Regional outlook

As ever, there are regional differences for the outlook in prices, although the number of regions expecting price rises this year has risen to eight, up from six in December.

Londoners (65.5) once again lead the way, and now expect the biggest lift in the value of their homes over the next 12 months than at any time since June 2010.

The North-South divide is evident to an extent as households in the South East (59.8) and the South West (55.9) are also very upbeat about the outlook for house prices. In contrast, those living in Wales (45.2), the North East (45.7) and Scotland (49.7) expect prices to fall.

Households in the North West (50.3), Yorkshire and the Humber (51.5), the East Midlands (51.5) and the West Midlands (50.8) all expect prices to remain stable or rise very modestly.

Those renting from private landlords (57.7) expect the biggest rise in prices over the next year, while those living rent free (50.0) are the most dubious about potential price rises.

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