Households in every region expect the value of their home to rise over the next 12 months, according to the latest Knight Frank/Markit House Price Sentiment Index.
The proportion of the 1,500 homeowners surveyed across the UK who said that the value of their home had risen over the last month hit a new high of 19.8%, while a record low 6.3% indicated the value had fallen. This gives a HPSI reading of 56.8, the highest since the index began in February 2009.
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.
July’s reading, up from 53.2 in June, marks the fourth month that the current price index has been in positive territory after 33 months of readings of 50 or under. The index indicates that after nearly three years of falling prices, households are increasingly confident that the value of their property is starting to show some sustained growth.
Households in London (65.3) reported that the value of their home had risen at the fastest rate over the last month, followed by those in the East of England (60.8) and the South East (59.4). Only households in the North West of England perceived that the value of their property had fallen (49.1) during the month.
Meanwhile the future HPSI, which measures what households think will happen to the value of their property over the next year, hit the highest level in three and half years.
Londoners are the most confident that prices will rise over the next year, with a reading of 78.0, the highest reading since the index began in February 2009. They are closely followed by those in the South East (75.5), where households are also more optimistic than at any time since the series started.
Households in the North West are expecting the most modest rise in prices over the next 12 months, with a reading of 62.1, down from 63.7 in June.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “There is no doubt that confidence has returned to the UK housing market in some measure. This can be attributed not only to the “Help to Buy” effect as well as signs of a strengthening economy coupled with expectations that interest rates will remain at record-low levels for several years yet.
“Mortgage borrowers are the most confident that prices will rise this year, and this optimism will no doubt be underpinned by expectations of even more affordable borrowing as mortgage lenders continue to cut their rates.
“Average UK house prices are still more than 10% lower than the market peak in 2007. After their lacklustre price performance in recent years, values in many areas will need to make significant headway to outstrip inflation and show growth in real terms. But the upbeat sentiment index suggests that the ‘green shoots’ of recovery may be emerging in the housing market.”
Have your say on this story using the comment section below