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Homeowners anticipate house price rises

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Homeowners across the UK are confident that the prices of their properties will continue to rise in the months ahead, the latest report suggests.

Data compiled by Knight Frank and IHS Markit for the monthly House Price Sentiment Index (HPSI) reveals that the majority of households believe that the price of their home increased in November 2016.

It represents the fourth consecutive month that the index reading has been above 50; any figure over 50 indicates that prices are rising, and the higher the figure, the stronger the increase.

Any figure below 50 indicates that prices are falling, and while 6.3 per cent of households believe that prices fell in November, 16.9 per cent of the 1,500 households surveyed across the UK think that the value of their home rose over the last month, which resulted in a HPSI reading of 55.3.

It marks consistent growth in sentiment since a dip in July, which was a temporary reflection of uncertainty surrounding the result of the EU Referendum outcome on June 23.

Four months of confidence growth have now taken place, with November’s reading broadly in line with the 55.7 recorded in October, mirroring the wider trend in UK house price growth post-referendum.

Future outlook

The outlook for future house price growth is particularly strong, according to the HPSI, which also measures what households think will happen to the value of their property over the next 12 months. The index rose to 64.6 in November, from 62.9 in October.

Among the respondents, mortgage borrowers (69.8) are the most confident that prices would rise, followed by those who own their home outright (67.0).

Grainne Gilmore, head of UK residential research at Knight Frank, commented: “Sentiment in the housing market is finding a post-EU vote stability.”

She added that households are confident that the value of their home is rising and will continue to do so over the next 12 months, albeit at a slightly lower velocity than what was anticipated at the start of the year.

Strong optimism

Tim Moore, senior economist at IHS Markit, added: “November’s survey reveals another positive month for UK housing market sentiment, with optimism up sharply from its post-referendum lows.”

He noted that households remain relatively cautious about the outlook for house price growth in 2017, as the Brexit process occurs, but positivity appears to be the overriding feeling.

It comes after figures from the Office for National Statistics (ONS) revealed that the UK economy has continued to grow following the shock result of the EU referendum.

Before June’s vote, some analysts had predicted that a Brexit decision would see GDP stall or even result in the economy contracting, but government data shows that the historic move did little to hamper productivity between July and September, with the economy expanding by 0.5 per cent over the three-month period.

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