Households perceived that the value of their homes rose in December, according to the House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics.
This is the ninth consecutive month that households across the UK report that the value of their home has increased.
More than 24% of the 1500 homeowners surveyed across the UK said that the value of their home had risen over the last month, up from 7.7% in December last year. Only 5.6% of households said the value of their home had fallen over the last month, giving a record HPSI reading of 59.4.
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.
This is slightly higher than October’s previous record reading of 59.1, and up significantly on the 47.1 reading recorded in December 2012.
Looking at the results on a regional basis, households in all 11 regions reported that the value of their home had risen in December, with those in London (67.3) and the South East (67.1) reporting the strongest growth over the last month.
The future HPSI, which measures what households think will happen to the value of their property over the next year, rose slightly month-on-month in December, but remained just shy of October’s record high of 71.1. The overall index reading was 70.5.
However, on a smoother three-month average basis, the future HPSI reading rose to a new series high of 70.6, up from 70.3 in the previous three month period.
Households in every region expect the value of their home to rise over the next 12 months, with those in the South East (77.2) expecting the biggest rise in prices, followed by those in the East of England (76.3) where the index reached a new high. While still positive, households in the West Midlands (61.7), the East Midlands (63.7) and the North East (64.9) expect more modest increases.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “Expectations that house prices will rise over the next year are becoming more entrenched across the country. Households in the South East and the East of England now expect the value of their properties to increase at a sharper rate than households in London. This in some part reflects the ‘doughnut’ effect that we are seeing in prices outside the central London market, with some regions now starting to see the most significant growth in residential property values since before the financial crisis.
“The increasing confidence in the market has been bolstered by policy, not least Help to Buy, to which the Chancellor re-affirmed his commitment in last week’s Autumn Statement.”
Chris Williamson, chief economist at Markit, said: “Households views on the value of their homes increased again in December, hitting the highest we’ve seen since during the recovery from the financial crisis.
“Expectations about future prices also picked up further, falling just shy of the post-crisis peak seen back in October, with households seemingly shrugging off the news that the mortgage element of the Funding for Lending Scheme will be withdrawn next year.
“Clearly the housing market and the potential risk to financial stability from sharply rising prices is likely to remain high on the agenda of the Bank of England’s Financial Policy Committee for some time. What’s reassuring to see, however, is that developers are responding to the upturn, with PMI survey data indicating the largest surge in house building for ten years. Controlling the increase in house prices and boosting the supply of new homes will be an important key to the sustainability of the UK economic recovery in 2014.”
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