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.
The survey of 1,500 households across the UK showed that sentiment about current house prices was weakest in Wales (40.4) and the North East (41.9). Only London bucked the trend, remaining the only region where residents said that prices had advanced modestly in June.
However the pace of growth was slower than in May (50.7 down from 50.9). The future HPSI which measures what households think will happen to the value of their property over the next year, remained in positive territory for the fifth consecutive month in June, the longest period of upbeat expectations since mid-2010. Some 30% of households anticipate a rise in the value of their home over the next 12 months, compared with 24% expecting a decline. The resulting index reading is 53.1, slightly down from May’s reading of 54.
Expectations for house price rises were recorded in eight of the 11 regions in June. Respondents in London remain the most upbeat (60.2), followed by those in the East of England (55.4) and the South East (55.3). Households are most pessimistic about prices in the North East (45.5) and the South West (46.7).
Confidence about future house price rises among those working in the public sector climbed to the highest level in 2 years (56.2). In a reversal of the prevailing trend since 2009, public sector workers are much more upbeat about the prospect of price rises than those in the private sector (52.9).
Respondents working in the Media/Culture/ Entertainment sector forecast the sharpest rise in the value of their home (67.6). Sentiment is also strong in the Utilities/Energy/Transport sector (58.3). The weakest sentiment is in the Retail sector (44.3), the fourth month this has been the case.
Increased house prices over the coming year are forecast by homeowners, although those with mortgages (56.9) are much more upbeat than those who own their home outright (51.7). In fact mortgage borrowers are more upbeat about price rises over the next 12 months than at any time since July 2010. Those renting privately also expect modest price rises over the next year (51.9), but those living rent-free at home predict that prices will fall (48.6), the first negative reading for four months.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: “House price sentiment has now been negative for two years, but the index shows the localised nature of the market. There are wide regional variations across the UK in terms of price performance, with London leading the way, underlining the economic strength of the capital compared to many other areas of the country.
“Looking forward, the regional split is even more pronounced, with households in London, the South East and East of England expecting healthy rates of growth over the next year, in contrast to those in the North who expect price falls. But in a departure from the traditional north-south divide in the property market, residents in the South West are also preparing for house price declines.
“While homeowners are generally more upbeat than renters about the outlook for house prices rises between now and June next year, it is notable that mortgage borrowers are significantly more optimistic than those who own their home outright. This may well be a reflection of recent signals from the Bank of England that interest rates will remain on hold at a record low of 0.5% for a significant period of time, and may even be cut further.”
Chris Williamson, Chief Economist at Markit, said, ““Households are downbeat about the current value of their properties but expect values to rise over the coming year, suggesting an overall air of modest optimism continues to prevail despite the growing raft of disappointing economic headlines. However, the survey is consistent with national prices rising by a meagre 2-3%, and optimism is largely confined to the south of England, notably London.
“High unemployment, high levels of job insecurity and low pay growth are all factors likely to restrain the housing market in coming months, though further stimulus from the Bank of England, which looks increasing likely to be sanctioned when the Monetary Policy Committee next meets in July, may provide the market with a welcome shot in the arm.”
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