Could things be looking up for the U.K. post-Brexit? Perhaps, according to the latest House Price Sentiment Index from real estate consultancy Knight Frank and data firm IHS Markit.
In fact, 15.2% of the 1,500 households surveyed in August across the U.K. said the value of their home had risen over the last month; just 12.4% said it had fallen.
Those figures have led to a 51.4 House Price Sentiment Index (HPSI) reading (according to Knight Frank, any figure over 50 indicates that prices are rising).
This month’s HPSI reading was a significant increase as compared to last month’s 48.3 figure, which was calculated immediately following the U.K’s vote to leave the E.U. But it’s not exactly through the roof, either, considering that the average HPSI for the first half of the year was 59.9. The index hit an all-time high of 63.2 in May 2013.
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Much of the sentiment is location-specific. While households in six of the 11 regions covered perceived a rise in their property value, respondents in the east of England reported the biggest increase (58.5), followed by those in the southwest (55.0) and the southeast (54.5). Scotland and the northeast of England were the only regions where sentiment fell from July to August—from 49.3 and 45.0 to 45.6 and 44.3, respectively.
"The regional variations in the index are striking in August, with households in several regions expecting a stronger rate of price growth over the next 12 months than those in London, a reversal of the trend seen in recent years," said Gráinne Gilmore, head of U.K. residential research at Knight Frank.
The future HPSI, which measures what people expect to happen over the next year, rose to 58.3 in August from 50.3 in July. But while the month-to-month growth is significant, long-term expectations are less so. In fact, the last time the future sentiment index was below 60 for two consecutive months was in March 2013.
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Still, it’s possible to look at the month-to-month growth as a sign that things are looking up, if only slightly.
"The greater political confidence instilled after Brexit by the swift appointment of a new prime minister, coupled with the Bank of England’s base rate cut, have provided some reassurance to markets in recent weeks," Ms. Gilmore said. "This is reflected in a tick up in the HPSI, although uncertainty about the medium-term outlook is weighing on sentiment overall."
For now, we’ll have to just wait and see.
"It is still too early to evaluate the full impact of the E.U. referendum on the U.K. property market, both at the national and local level," said Tim Moore, senior economist at IHS Markit. "However, the latest survey data serves as an early indication that the aggressive policy action announced by the Bank of England in August has had a stabilizing influence on overall property price expectations."
He added: "It will take until early autumn to better gauge the short-term direction of travel for household sentiment. But, for the time being, it seems that the post-Brexit jolt to confidence has paused for breath at least."
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