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.
Property values were perceived to have fallen in all 11 regions this month, according to the survey of 1,500 households. The sharpest declines were in Wales (35.7) and Yorkshire and the Humber (38.2).
London saw the least rapid decline (49.5).
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. Figure 3 (on the atatched pdf) shows that the index moves ahead of mainstream house price indices, confirming the advantage of an opinion‐based survey which provides a current view on household sentiment, rather than historic evidence from transactions or mortgage market evidence.
The future HPSI, which measures what households think will happen to the value of their property over the next year, edged just above the 50 no-change mark in February, signalling that average prices across the UK will remain broadly flat. Some 26% of households said they expected the value of their home to rise, while 25.7% anticipate a fall, giving a reading of 50.2.
Households in six of the 11 regions expect the value of their homes to remain broadly stable or rise over the next year, the largest proportion of regions which aren’t expecting prices to fall since September last year.
Households in London (59.9) expect appreciable rises, with those in the West Midlands (52.2) predicting more modest increases. Households in Yorkshire and the Humber (43.7) are most pessimistic about the outlook for prices, followed by those in Scotland (44.0) and Wales (45.4).
Those working in the private sector (52.6) are more upbeat about the prospect of house prices rises over the next year than those working in the public sector (49.0).
There was a slight recovery in the outlook among those who work in the financial and business services sector, with a reading of 51, up from a record low of 43.1 last month. But this is still well below the average reading of 58.2 since the HPSI began. Those who work in the media, culture and entertainment sectors expect the biggest house price rises (63.2) followed by those working in IT and telecoms (59.8).
But there was a sharp fall in sentiment among those working in the construction sector, with a reading of 39.2, down from 55.4 in January, and the lowest reading since April 2009.
As has been the case for most months since early last year, there is a split in outlook among those who own their homes. Those who are mortgage borrowers (54.4) are more optimistic that the value of their property price will rise over the next 12 months, while those who own their home outright (46.1) expect prices to decline.
But those who are most downbeat about house prices this month are those who are in social rented housing (44.7).
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “The outlook among households for property prices over the next 12 months varies on a regional basis, emphasising the multi-speed housing market. Yet the overall outlook is muted, reflecting the economic travails of the UK and the Eurozone which are sapping confidence in many parts of the UK.
“The current and upcoming public sector spending cuts seem to be taking their toll on workers in the sector, who remain much more downbeat about future house prices than their counterparts in the private sector.
“One bright spot for homeowners throughout the economic turbulence has been the record-low base rate. The fillip this has given to the household finances of many mortgage borrowers may signal why they are more upbeat about the future path of house prices than their fellow homeowners who own their home outright.”
Tim Moore, senior economist at Markit, said: “The latest survey points to subdued yet stable house price sentiment in February. UK households are split evenly on whether they expect their property value to rise or fall in the next 12 months.
Continuing the trend seen in 2011, expectations of house price gains are concentrated in London and among those in the highest income group.
“By home status, mortgage holders are the most upbeat, with their property price forecasts the strongest since September 2010. Meanwhile, public sector workers remain more likely to anticipate house price declines than those in the private sector. These twin trends in many ways capture the essence of the overall house price outlook, namely that low interest rates are keeping a floor under property values, while lingering concerns about job security and incomes are acting as a counterbalance on prices.”
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