Consumers perceive house prices still to be falling – but sentiment is a little more upbeat about house price growth in the next 12 months, with tenants and mortgage borrowers most likely to predict price rises.
According to the Knight Frank / Markit November House Price Sentiment Index (HPSI), consumers believe that house prices have been on a downward trend since July last year.
Around a fifth of the 1,500 households surveyed this month said they thought the value of their property had fallen, while only 8% said that prices had risen.
Property values were reported to have fallen in all regions, with those in the North-East perceiving the sharpest falls in prices (39.9%). London (48.7%) and the East Midlands (47%) were seen as the most resilient markets.
Next year, 26% expect price falls while 28% expect price rises. But sentiment varies enormously according to region, with Londoners highly optimistic and residents in Yorkshire and the Humber very downbeat.
There are also sharp differences in attitude between those who own their home outright, those with mortgages, and tenants.
Owners expect the value of their property to fall over the next year (46.4%), while of those with a mortgage, 52.4% expect prices to rise. Of those in the private rented sector, 56% expect the biggest jump in prices over the next year.
Households with an income of more than £58,000 a year were most upbeat about prices (65.4%), while of those earning less than £15,000, 45.7% expect the largest price falls. The gap between these outlooks for the housing market is the widest on record.
Tim Moore, senior economist at Markit, said: “People renting from private landlords anticipate higher property values in the year ahead, while those owning their home outright expect prices to fall.
“These trends bode ill for consumer spending, especially on big-ticket items, since it suggests home owners will tighten their belts in the face of worries about their asset values, while those looking to get on to the housing ladder may feel the need to postpone spending in order to guard against greater deposit requirements.”
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