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Homeowner report largest surge in confidence about house prices for seven years
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Households in all regions of the UK believe the value of their homes rose in September as confidence bounces back in the housing market after initial concerns following the vote for Brexit. Knight Frank said in its house price sentiment report for the month that in all 11 regions, more homeowners believed their property's value rose rather than fall.
The overall House Price Sentiment Index, based on surveys compiled by the research firm IHS Markit, hit 56.9.
It was up sharply from August's 51.4 in the largest monthly rise for seven years. But the report said its September reading is still below the 59.9 average for the six months leading up to the EU referendum on 23 June, when the country voted for Brexit.
"House price sentiment is mirroring the broader pick-up in confidence after Brexit," said Gráinne Gilmore, head of UK residential research at Knight Frank.
"This comes as initial data shows a continuing positive picture for both employment and economic output. The housing market is now entering the typically busier autumn season, with indications that activity is rising, especially in key urban areas.
"There is still uncertainty surrounding the next steps of how the UK will move to exit the European Union, and this could create some economic turbulence. Yet the fundamentals of the housing market remain unchanged, underpinned by limited supply and ultra-low mortgage rates. "
In September, the average asking price for a home in England and Wales rose 4% over the year and 0.7% month-on-month, said the Rightmove house price index, hitting £306,499. Prices are supported by and ongoing shortage of housing and cheap credit, with the Bank of England's base rate slashed to 0.25% and schemes for first-time buyers such as Help to Buy.
"September data highlights a sustained recovery in house price sentiment from the three-and-a-half year low seen just after the EU referendum," said Tim Moore, senior economist at IHS Markit.
"In each of the past two months, UK households' views have become more upbeat in terms of both current property values and expected prices for the year ahead. There are early signs of a V-shaped recovery in house price sentiment across all UK regions monitored by the survey.
"However, looking through the summer volatility, house price sentiment remains weaker than seen on average in the first half of the year, and well below the peaks seen during spring of 2014.
"As a result, recent survey data indicates that Brexit uncertainty has temporarily dented but not derailed housing market confidence. Moreover, the prospect of low interest rates for longer and an entrenched shortage of housing supply are key factors supporting UK property values."
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