Almost 30% of households in the UK believes that the value of their home rose in June, compared with just 4.4% who thought it had fallen, according to the latest house price sentiment index.
Some 29.3% of the 1,500 surveyed across the UK said that the value of their home had risen over the last month, the index from Knight Frank and Markit Economics shows.
This gave the HPSI a reading of 62.5, down from the previous record high of 63.2 achieved last month but it is the fifteenth consecutive month that the reading has been above 50.
Households in all 11 regions covered by the index reported that prices rose in June, with those living in London perceiving that the value of their home had risen at the strongest rate at 71.9, followed closely by households in the East of England at 66.3.
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell in June to 71.6. While expectations for future price growth are still positive, this is the lowest monthly reading in six months and is significantly lower than the record high 75.1 reading achieved in May.
Households in every region expect the value of their home to rise. However, the scale of anticipated price growth eased in nine of the 11 regions, with the biggest fall seen in the North East, where the index dropped from 69.4 to 58.8.
Expectations in London also declined for the second consecutive month, with the index reading for the Capital at 77.8 in June, down from a record high of 83.1 in April.
‘This month marks the first significant easing in house price expectations in nearly a year, and it is the biggest monthly decline since October 2011, suggesting a greater degree of caution by households,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘This may well be welcomed by policymakers amid discussions about the possible use of macro prudential instruments, or “cooling measures”, by the Bank of England,’ she pointed out.
‘Interest rates have also become a hot topic over the last month, with several rate setters, including the Bank Governor, hinting that rates will rise sooner than the second quarter of next year, which is when markets were factoring in the first increase. The prospect of a rate rise before Christmas, with the uplift in mortgage costs for new and existing borrowers that would bring, may well also be weighing on sentiment,’ she explained.
The index also shows that some 6.2% of UK households said they planned to buy a property in the next 12 months. This is up from 5.1% in April, but down slightly from 6.5% in May.
A further 17.2% of households say they plan to purchase a property within the next five years, and a further 23.4% indicate they want to buy a house or apartment in more than five years’ time. Around 19.3% of households say they have no plans to buy at any stage and 34% of households are undecided.
‘June’s decisive fall in house price sentiment provides a strong signal that the UK property market is starting to cool amid greater scrutiny of mortgage lending and an increased risk that interest rates will start to rise before the end of the year,’ said Tim Moore, senior economist at Markit.
‘While house price perceptions hit record highs in six out of 11 regions during May, only the South East experienced a fresh peak in June. Moreover, in the majority of UK regions, house price expectations have now fallen back to their lowest in 2014 so far,’ he explained.
‘Overall, it appears that the consensus view among households is for property values to continue rising over the coming months ahead, but not quite at the breakneck speed seen during the first half of 2014,’ he added.
Source Propertywire