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House price expectations in the UK remain positive, but signs of a post-election bounce are largely confined to London, according to the latest property sentiment index. Some 20.2% of the 1,500 households surveyed across the UK for the Knight Frank and Markit Economics house price sentiment index said that the value of their home had risen over the last month, while 4.1% reported a fall. This gave the HPSI a reading of 58, the twenty-sixth consecutive month that the reading has been above 50. But it was a slight decrease on last month’s reading of 58.2, indicating that households may have factored in the uncertainty caused by the general election to perceived price growth. ‘There is little evidence yet of an election bounce in house price expectations, reflecting current market conditions. Activity is certainly picking up following the election of a majority government, and the certainty this has provided in the housing market,’ said Grainne Gilmore, head of UK residential research at Knight Frank. Demand is rising, but an increasing number of vendors are putting their homes on the market, and this is set to create more balance in terms of pricing. Londoners expectations for future price rises reached their highest level since November last year, perhaps reflecting the increased certainty in the outlook for property taxes in the capital,’ she added. The future HPSI, which measures what households think will happen to the value of their property over the next year, fell in May to 70, slightly down from 70.2 in April. In spite of the monthly decline, the proportion of households expecting prices to fall over the next 12 months at 5.2% was the lowest ever recorded since the survey began in 2009. Meanwhile, 45.1% anticipate a rise in the value of their property and 49.7% forecast no change over the year ahead. Households in the East of England at 77.8 were most confident about price rises, followed by those in London at 77.7 and the South East at 73.5. The data also shows that some 6.4% of UK households said they planned to buy a property in the next 12 months, down from 6.5% a year previously. On a regional basis, nearly one in 10 households in the North East is planning a purchase in the next 12 months, followed by those living in London where 8.4% of households said they would be buying a property in 2015. ‘May’s survey highlights positive house price expectations across the UK, although households are still much less bullish than was seen at the post-recession peak exactly one year ago,’ said Tim Moore, senior economist at Markit. ‘Tighter lending criteria and stretched affordability continue to restrain house price sentiment, while improving labour market conditions and continued low mortgage rates remain two key drivers of positive property price trends,’ he explained. ‘The most likely area of the property market to experience an appreciable post-election bounce is the house building sector, as decision making should reaccelerate after several months… Continue reading →