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 1500 households across the UK showed that households in London (53.4) felt the value of their home rose over the past month, continuing the trend set back in March.
There was also a turnaround in house price performance in the East of England (50.3) with households reporting the first price rises since June 2010. Households in all the other nine regions reported house price falls, with Scotland (40.0) seeing the deepest declines.
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. The future HPSI, which measures what households think will happen to the value of their property over the next year, climbed in September. Around 28% of households anticipate a rise in the value of their home over the next 12 months, compared with 21% expecting a decline. The resulting index reading is 53.2, up from August’s reading of 51.8 and marking the highest reading since May this year.
Expectations for house price rises were recorded in seven of the 11 regions in August. But "north/south" divide became blurred amid a turnaround in expectations among households in the North East (54.6), West Midlands (52.2) and the East Midlands (51.0). Households in these regions now expect prices to rise over the next year whereas in August they had expected prices to fall. In contrast, households in Yorkshire and the Humber (46.4) and Scotland (47.1) now expect price falls, whereas they had predicted prices would rise in August.
London continues to lead the way, with households in the Capital expecting the biggest price rises over the next year with a reading of 63.1, up from 61.3 in August.
Households across all tenures, from outright homeowners to those living rent-free, are upbeat about the prospect for price rises over the next year. This is the first time all households have been united in their expectations for prices since May this year, and it is only the fourth month this has happened over the last two years.
Those living rent-free (56.8) are the most optimistic about prices, while those renting from social landlords (51.2) expect the most modest rises in prices, followed by those who own their home outright (51.3) with no mortgage.
The top earners continue to be the most optimistic about house prices. Those earning more than £58,000 a year have an average future HPSI reading of 56.6, although this is down from 57.5 in August. Those earning less than £15,000 a year were next in line, with a reading of 52.8, up from 48.5 in August. Those earning between £15,000 and £23,000 expect the smallest increase, with a reading of 50.6.
Gráinne Gilmore, head of UK residential research at Knight Frank, said: "The ‘back-to-school’ gloom is certainly not affecting the housing market. Indeed the uplift in expectations fits with the traditional rise in activity after the school holidays.
"This bounce in sentiment also coincides with some brighter news on the economy, with serious questions being raised about whether the country is actually in recession. Better than expected employment data, as well as encouraging signs from the services and manufacturing sectors, are also helping to bolster economic confidence.
"But the house price performance is still localised, as the figures show, reflecting how the challenges within the housing market are affecting different regions. A lack of mortgage lending continues to act as a dampener on activity in many areas, especially among first time buyers."
Chris Williamson, chief economist at Markit, said: "September saw some confidence continue to return to the UK housing market, but expectations of where house prices will be in 12 months’ time remain well below levels seen earlier in the recovery and suggest little overall change in house prices.
"Confidence continues to be hit by poor availability of mortgage finance, high unemployment, low pay growth and uncertainty about the outlook. However growing evidence of a rebound in the domestic economy since the second quarter and recent better news on the labour market have all helped to buoy sentiment in September, which could perhaps lead to further gains in the HPSI in coming months if the news flow continues to improve."
Have your say on this story using the comment section below