UK house prices to continue to rise, but sentiment down

UK house prices to continue to rise, but sentiment down

House prices across the UK are set to continue to rise across the course of the rest of 2015, but the sentiment has dropped from its record highs last year as the market reaches a more stable place, according to the latest released report. 

In the new July House Price Sentiment Index from Knight Frank and Markit Economics, it was shown that homeowners still believe the value of their homes is rising. This has been a reality across the nation now for some 28 consecutive months as the strength of the market continues to shine through. 

However, July’s reading of 58.6 was a slight decrease on the 59.5 recorded in June, making it just the second highest reading of the year. It also leaves sentiment trailing last year's figure, when it reached a record high among the continuous price rises we were seeing. However, despite being far lower than a year ago, figures still remain in a place where we are seeing strong belief among owners that the market is going to continue to improve. 

Tim Moore, senior economist at Markit Economics, said that there are real positives in the market at the moment, adding that it was a bonus that sentiment now sits far ahead of the 18-month low that was witnessed in February of this year. 

"A gradual rebound in households’ property value perceptions has been underpinned by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment," he said, before going on to say that these conditions at the current time should mean there is a strong position from which the market can continue to grow over the course of the second half of the year. 

Grainne Gilmore, head of UK residential research at Knight Frank, backed up this belief, and said: "Overall expectations for future house price growth remain firm, underpinned by a strengthening labour market, improving economy and ultra-low mortgage rates."