Confidence within the Market
Confidence in the housing market is more likely to be found with homeowners than among market experts, it seems. Several pieces of research have been published of late from market observers and estate agents that offer divergent readings of the market.
Let’s take the experts first. Back in January of this year the Centre for Economics and Business Research make their prediction for the course of 2015, and stated that there would be a 0.6 per cent drop in UK prices, with particularly heavy price falls in London where the figure of a 3.6 per cent drop was suggested.
In April these figures were rejigged, with prices rises now expected to rise over the course of 2015, but only by 1.5 per cent. Uncertainty over the results of the election and new stamp duty regulations were the reasons given for the lowering of expectations in London, in particular.
If we turn, though, to the Knight Frank and Markit Economics House Price Sentiment Index (HPSI) and the Future House Price Sentiment Index we find a more sanguine picture of the market. The HPSI is based on a survey of 1500 homeowners.
Of those asked at the end of May, 20.2 per cent of the 1500 homeowners reported having seen the value of their home rise over the course of the month. Only 4.1 per cent believed the value of their property had declined in that time. That gives an overall HPSI reading of 58, the twenty-sixth month in succession that the index has stood at over 50, but down slightly on the April index figure when it stood at 58.2.
In the Future HPSI, in which homeowners are asked their expectations for the next 12 months, the index stood at 70 at the end of May, with 45.1 per cent of respondents expecting rises, and 49.7 believing there would be little change.
Price rises are expected particularly in Eastern England and the South-East where 77.8 per cent and 73.5 per cent of those surveyed expect rises, and in London where 77.7 per cent expect the value of their home to rise in a significant counter-view to that of the Centre for Economic and Business Research.
With the election now gone, the June index figures show even greater levels of confidence. All regions reported price rises across the month of June, with 23.7 per cent of respondents reporting rises. The HPSI stands at 59.5, the highest since October last year, though still shy of 63.2 where it peaked last May. And the Future HSPI was up on May, rising to 70.5.