KNIGHT Frank’s House Price Sentiment Index (HPSI) signals that average house prices fell for the 29th consecutive month in November.
However the proportion of homeowners reporting that the value of their home had risen climbed from six per cent to nine per cent, while the proportion saying that the value of their home had declined fell from 16 to 14 per cent. This resulted in a HPSI reading of 47.6, up from 45 in October. 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 households in every region bar two felt the value of their home fell over the last month. The two exceptions, as has been the case for most of the year, were London (54.1) and the South East (50.5). Prices were perceived to have fallen most sharply in Wales (39.3) and the North West (45.1).
Since the inception of the HPSI, the index has been a clear lead indicator for house price trends. 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, rose sharply in November.
Around 30 per cent of households anticipate a rise in the value of their home over the next 12 months, while 18 per cent expect a fall. The resulting index reading is 55.9, marking a substantial bounce back from October’s reading of 50.5, which was the lowest reading in eight months. On a smoother three-month average reading, the future HPSI in November was 53.2, up from 51.8 in the three months to October.
Households in every region except Wales (45.2) expect the value of their property to rise over the next 12 months, with London leading the way (63.3).