London Property Price Hike Expectations Hits Six Month High
By Lianna Brinded
UK homeowner sentiment over whether property prices will rise over the next few months rose again in October.
According to Knight Frank/Markit's latest House Price Sentiment Index, expectations for house price growth in London rebounded to their highest level in six months while expectations for future increases also rose.
However, overall house price growth expectations remain significantly lower than May's record-high
"Better than expected economic growth coupled with a likely delay to interest rate rises because of the turmoil in the Eurozone seems to have provided a fillip to house price sentiment this month," said Gráinne Gilmore, head of UK residential research at Knight Frank.
"The jump in price expectations in London may be due to a moving away from the idea of a 'mansion tax' by the Liberal Democrats in favour of a reform to council tax. Yet, despite the rise in expectations in London, households in the South East still expect larger increases in the value of their homes over the next 12 months, reversing the trend seen during most of last two years."
Some 27.1% of the 1,500 households surveyed across the UK said that the value of their home had risen over the last month, while only 5.6% reported a fall.
Any figure over 50 indicates that prices are rising, and the higher the figure, the steeper the increase. Any figure below 50 indicates that prices are falling, says Knight Frank and Markit.
Around 6.2% of UK households plan to buy a property in the next year and emerging news that the Bank of England may delay hiking interest rates could bring more buyers to the market.
Mortgage borrowers were the most confident that prices will rise over the next year (74.9), followed by those who own their home outright (71.6).
"October's survey indicates that house price sentiment has cooled from the peaks seen earlier in the year, but expectations of future house price rises are well entrenched across the UK.
"Stronger labour market conditions and an improving domestic economic backdrop should continue to support housing market conditions during the months ahead," said Tim Moore, senior economist at Markit.
"However, a repeat of last winter's breakneck acceleration in house price growth is unlikely, given tightened lending criteria, subdued pay inflation and the greater possibility of future interest rate rises."