Property price sentiment increases at slower pace in June

Fewer households across the UK perceive that the value of their home rose in June, according to the latest house price sentiment index to be published.

Some 23.7% of the 1,500 households surveyed for the index from Knight Frank and Markit Economics across the UK said that the value of their home had risen over the last month, down from 25.6% in May, while 4.4% said that prices had fallen, down from 3.6% the previous month. 

The fall in perceived property price growth resulted in a HPSI reading of 59.7 in June - a marginal drop from the 61 recorded in May and significantly lower than the peak of 63.2 recorded in May 2014.

However, a reading above 50 signals an increase in residential property prices. This marked the 39th successive month of the index remaining above 50.

Once again, there was a regional disparity in the index readings. Highlighting the multi-speed housing market in the UK, with gap between sentiment in the North and the South widened to the biggest margin since the index began in 2009.

Tim Moore, senior economist at Markit, said: “Heightened political and economic uncertainty seems to have weighed on house price sentiment to some degree in June, with expectations for the year-ahead slipping to the lowest since August 2013.

“However, the month-to-month easing in house price sentiment was relatively modest, suggesting that UK households perceived little fundamental change in property market conditions since May.

“Instead, ultra-low mortgages, improving labour market conditions and little sign of impending interest rate rises all appear to have helped keep house price sentiment at an elevated level in comparison to the survey’s historical average.”

The future HPSI, a measure of expectations on house prices fell to 67.7 this month, down from 70.3 in May. This was the lowest reading since August 2013, indicating that households are less confident that prices will rise than at any time since then.

“The decline in the future household sentiment index to a near three-year low coincides with growing uncertainty over the result of next week’s EU Referendum as the debates over the UK’s future step up a gear, ” said Grainne Gilmore, head of UK residential research at Knight Frank.