House price sentiment hits post-referendum high
The upward direction of travel for housing market sentiment in February has seen property price expectations recover to levels seen just ahead of the EU referendum
The majority of households across the UK perceive that the value of their home rose over the last month, according to the latest House Price Sentiment Index from Knight Frank and IHS Markit.
February’s reading was the seventh consecutive month that the index has been in positive territory and now stands at a new post-referendum high.
Respondents in ten of the 11 regions covered by the index believe the value of their home increased, led by those in London.
Households in all regions expect the value of their home to increase over the next 12 months.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The rise in household sentiment on house prices comes as a less cloudy picture of the UK economy starts to emerge. Earlier this month the Bank of England revised up its forecasts for GDP growth, and although the country still has to negotiate a withdrawal from the EU, the immediate economic conditions remain positive. Homebuyers and homeowners are also benefitting from near record-low mortgage rates, although affordability is an increasingly pressing issue in some areas.
“It is noticeable that sentiment on the future direction of house prices has particularly picked up in the Midlands and East of England, with the index reading for February close to or stronger than the average reading in the three months before the EU vote. This reflects the relative strength of price growth in these markets which are benefitting from the strong performances of urban areas and the relative price differential to properties in the South East and London.”
Tim Moore, senior economist at IHS Markit, added: “UK households are gaining confidence about the outlook for their property values over the course of 2017, driven by the improved economic backdrop, resilient labour market conditions and a continued boost from ultra-low mortgage rates. The upward direction of travel for housing market sentiment in February has seen property price expectations recover to levels seen just ahead of the EU referendum, with this pattern apparent among households in all UK regions.
“Brexit-related anxieties appear to have receded among buyers, but there remains a sizeable list of factors likely to keep a brake on price momentum during the year ahead. These include localised affordability constraints for first time buyers, generally subdued pay growth, and a renewed squeeze on household budgets from rising living costs.”