The report is opinion-based, and measures 1500 homeowners' perception of the value of their homes and the outlook for house prices in the coming 12 months, often predicting a trend in house prices as the mood of the nation's buyers and sellers shifts.
Only 6% of households in this month's survey said that the value of their home had risen, with 16% saying that the value of their property had declined - even those surveyed in London, where prices seem to climb steadily, reported perceived price falls for the first time since February this year.
While 24% of households responded that they expected a rise in the value of their home in the next 12 months, 23% said that they expected the value to fall, creating the sharpest fall in the future price index for over a year. Expected price rises were recorded in only 3 of the 11 regions in October. This marks a dramatic departure from the trend seen throughout the spring and summer months when an average of six regions forecast that house prices would rise.
Households in the North West are the least optimistic about prices, with households in the region having forecasted house price falls for the past six months.
Gráinne Gilmore, head of UK residential research at Knight Frank, said:
“The summer ‘feel-good’ factor has ended with a bump. There have been glimmers of good economic news over the past few months, but these have been rather overshadowed by party political conferences which have focused closely on the difficult economic climate.
“In addition, the International Monetary Fund dramatically revised down its forecasts for the UK economy this month, denting confidence that the current fiscal austerity plans will be enough to deliver convincing growth.
“This downturn in economic sentiment has been reflected in the house price sentiment index. Households in London and South East as ever remain most positive about the outlook for prices, but it is interesting to note that even Londoners’ expectations have lessened in terms of the price increases expected, with the second lowest future HPSI reading since the start of the year.”
Chris Williamson, chief economist at Markit, said:
“The drop in sentiment about house prices over the coming year is a surprise, and suggests that the Government’s Funding for Lending Scheme, which - according to the lenders – reportedly resulted in a marked increase in the availability of finance for mortgages in the third quarter, has yet to filter down to improved optimism about the housing market. Instead, it seems that people have become more nervous about the economic and housing market outlooks for the coming year.
“Once again, the economic recovery appears to be missing the vital ingredient of confidence. The future outlook is clouded by confusion over the current health of the economy and the appropriate policy response, as well as worries about the impact of austerity and the eurozone’s crisis.”
