House price sentiment steady

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by Gill Montia

The Knight Frank/Markit house price sentiment index remained steady in January with some 19% of households questioned saying the value of their home had fallen since December, and around 5% reporting a rise.

The resulting house price sentiment index of 43.2 is down from 43.3 in December, but well up from the reading of 38 recorded in January 2011.

Any figure under 50 indicates that prices are falling, and the lower the figure, the steeper the decline.

In January, property values were perceived to have fallen in all 11 regions of the UK, with the sharpest declines in the North East (38.6) and Wales (40.2).

The least pronounced falls were in London (47.7), but the reading for the capital is still the lowest in three months.

There was a notable deterioration in sentiment among those who own their own homes outright, with the reading for this group 36.4, down from 40.8 in December, and hitting its lowest point in eight months.

Those working in the private sector (44.9) were slightly more upbeat than those working in the public sector (42.1) about the rate of decline in their house prices.

Meanwhile, the index tracking sentiment for the year ahead remained slightly below the 50 “no-change” mark in January.

Households in only three of the 11 regions expected the value of their homes to rise in 2012 as follows: London (57.8), the South East (54.3) and Scotland (52.9).

Prices are expected to decline in all other regions, with the biggest falls anticipated in the North East (41.7) and Wales (42.6).

Markit’s senior economist, Tim Moore, comments: “The verdict from households across the UK is that there will be little movement in their property values during 2012, with exactly half expecting no-change and only slightly more anticipating a fall than a rise.”

He adds: “Forecasts of roughly stagnant house prices are symptomatic of the caution prevailing about local job market conditions and the gloomy economic news spreading from the euro area.”